1.1 	A bill for an act
1.2 	relating to financing and operation of government in
1.3 	this state; changing income, corporate franchise,
1.4 	withholding, property, sales and use, deed, health
1.5 	care gross revenues, fuels, cigarette and tobacco
1.6 	products, occupation, net proceeds, production,
1.7 	liquor, insurance, rented vehicles, and other taxes
1.8 	and tax-related provisions; making technical,
1.9 	clarifying, collection, enforcement, refund, and
1.10 	administrative changes to certain taxes and
1.11 	tax-related provisions; changing fiscal disparities
1.12 	provisions, business subsidy provisions, and payments
1.13 	in lieu of taxes; changing local government and
1.14 	property tax aids and credits; updating references to
1.15 	the Internal Revenue Code; changing property tax
1.16 	exemptions, homesteads, assessment, valuation,
1.17 	classification, class rates, levies, exclusions,
1.18 	review and equalization, appeals, notices and
1.19 	statements, and other property tax-related provisions;
1.20 	requiring state contracts be with vendors registered
1.21 	to collect use taxes; modifying and authorizing local
1.22 	sales and lodging taxes; changing the taxation of
1.23 	liquor and cigarettes and tobacco products; imposing
1.24 	tobacco product delivery sales requirements; requiring
1.25 	registration of tax shelters and providing for a
1.26 	voluntary compliance initiative; providing for an
1.27 	international economic development zone; conveying
1.28 	certain powers and providing tax incentives in the
1.29 	zone; changing job opportunity building zones, border
1.30 	city development zones, and biotechnology and health
1.31 	sciences industry zone provisions; changing provisions
1.32 	relating to economic development and housing and
1.33 	redevelopment authorities; providing for training and
1.34 	conduct of assessors; changing and imposing powers and
1.35 	duties on the commissioner of revenue and other state
1.36 	agencies and departments and on certain political
1.37 	subdivisions and certain officials; imposing certain
1.38 	duties on tax preparers; changing provisions relating
1.39 	to certificates of title on manufactured homes;
1.40 	changing electronic filing requirements; authorizing
1.41 	the issuance of certain state bonds; specifying the
1.42 	status of certain trusts; changing and imposing civil
1.43 	and criminal penalties; requiring studies and reports;
1.44 	allocating and transferring funds; appropriating
1.45 	money; amending Minnesota Statutes 2004, sections
1.46 	16C.03, by adding a subdivision; 116J.993, by adding a
2.1 	subdivision; 116J.994, subdivisions 4, 5, 9, by adding
2.2 	a subdivision; 168A.05, by adding a subdivision;
2.3 	270C.02, subdivision 2, as added; 270C.27, subdivision
2.4 	1, as added; 270C.28, subdivision 2, as added;
2.5 	270C.445, as added, by adding a subdivision; 272.02,
2.6 	subdivisions 7, 22, 64, as amended, 73, as added, by
2.7 	adding subdivisions; 273.0755; 273.11, subdivision 1a,
2.8 	by adding subdivisions; 273.112, subdivision 3;
2.9 	273.124, subdivision 1; 273.125, subdivision 8;
2.10 	273.13, subdivisions 22, 25, as amended; 274.01,
2.11 	subdivision 1; 275.025, subdivisions 3, 4; 275.065,
2.12 	subdivisions 1a, 3, by adding subdivisions; 275.70,
2.13 	subdivision 5, as amended; 276.04, subdivision 2, as
2.14 	amended; 287.20, subdivisions 2, 9, by adding a
2.15 	subdivision; 287.21, subdivision 1; 289A.02,
2.16 	subdivision 7; 289A.08, subdivisions 1, 7, 13;
2.17 	289A.11, subdivision 1; 289A.20, subdivisions 2, 4;
2.18 	289A.26, subdivision 2a; 289A.38, by adding a
2.19 	subdivision; 289A.56, by adding a subdivision;
2.20 	289A.60, subdivisions 4, 6, as amended, 20, by adding
2.21 	subdivisions; 290.01, subdivisions 6b, 7, 19, as
2.22 	amended, 19a, as amended, 19b, as amended, 19c, as
2.23 	amended, 19d, 29, 31; 290.032, subdivisions 1, 2;
2.24 	290.06, subdivisions 2c, by adding a subdivision;
2.25 	290.067, subdivisions 1, 2a; 290.0671, subdivision 1;
2.26 	290.0674, subdivision 2; 290.0675, subdivision 1;
2.27 	290.091, subdivision 2; 290.0921, subdivision 3;
2.28 	290.0922, subdivisions 2, 3; 290.191, subdivisions 2,
2.29 	3; 290.9705, subdivision 1; 290A.03, subdivisions 3,
2.30 	15; 295.50, subdivision 3, by adding a subdivision;
2.31 	295.52, subdivision 4; 295.53, subdivision 1; 295.55,
2.32 	subdivision 4; 296A.09, by adding a subdivision;
2.33 	297A.61, subdivisions 3, as amended, 4, as amended;
2.34 	297A.67, subdivisions 6, 29, by adding a subdivision;
2.35 	297A.68, subdivisions 2, as amended, 5, as amended,
2.36 	35, 37, 38, by adding subdivisions; 297A.70,
2.37 	subdivisions 8, 10; 297A.71, by adding subdivisions;
2.38 	297A.75, subdivisions 1, as amended, 2, 3; 297A.99,
2.39 	subdivision 9, by adding a subdivision; 297F.01, by
2.40 	adding a subdivision; 297F.09, by adding a
2.41 	subdivision; 297F.10, subdivision 1; 297I.01,
2.42 	subdivision 13a, as added, by adding a subdivision;
2.43 	297I.05, subdivision 4, by adding a subdivision;
2.44 	298.01, subdivisions 3, 4; 298.24, subdivision 1, as
2.45 	amended; 469.033, subdivision 6; 469.1082, by adding a
2.46 	subdivision; 469.169, by adding a subdivision;
2.47 	469.310, subdivision 11, as amended, by adding a
2.48 	subdivision; 469.316; 469.317; 469.337; 473F.02,
2.49 	subdivision 2; 473F.08, subdivision 3a; 477A.011,
2.50 	subdivision 36, as amended; 477A.013, subdivision 8;
2.51 	477A.03, subdivisions 2a, 2b, as amended; 477A.11,
2.52 	subdivision 4, by adding a subdivision; 477A.12,
2.53 	subdivisions 1, 2; 477A.14, subdivision 1; 501B.895,
2.54 	as added; Laws 1991, chapter 291, article 8, section
2.55 	27, subdivision 4, by adding a subdivision; Laws 1993,
2.56 	chapter 375, article 9, section 46, subdivisions 2, as
2.57 	amended, 3, as amended; Laws 1994, chapter 587,
2.58 	article 9, section 8, subdivision 1; Laws 1998,
2.59 	chapter 389, article 8, section 43, subdivisions 3, 4,
2.60 	5; Laws 2001, First Special Session chapter 5, article
2.61 	12, sections 44, 67, 95, as amended; Laws 2002,
2.62 	chapter 377, article 3, section 4; Laws 2002, chapter
2.63 	377, article 11, section 2, subdivisions 1, 4;
2.64 	proposing coding for new law in Minnesota Statutes,
2.65 	chapters 174; 270C; 273; 289A; 295; 297A; 297F; 325F;
2.66 	469; repealing Minnesota Statutes 2004, sections
2.67 	272.02, subdivision 65; 477A.08.
2.68 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

2.69 	ARTICLE 1
3.1 	PROPERTY TAXES

3.2 	Section 1. Minnesota Statutes 2004, section 168A.05, is
3.3 	amended by adding a subdivision to read:
3.4 		Subd. 1c.Manufactured home; exemption for
3.5 	destruction. The provisions of subdivision 1a do not apply if
3.6 	title is to be transferred to an owner of a manufactured home
3.7 	park as defined in section 327.14, subdivision 3, who provides
3.8 	to the county auditor or treasurer a notarized statement that
3.9 	the manufactured home is to be destroyed or moved to a site and
3.10 	destroyed.
3.11 	
EFFECTIVE DATE. This section is effective the day
3.12 	following final enactment.

3.13 	Sec. 2. [174.11] COMMISSIONER TO NOTIFY COUNTY AUDITOR OF
3.14 	PROPERTY ACQUISITIONS.
3.15 	Upon acquisition of any taxable real property, the
3.16 	commissioner must notify the county auditor of the county where
3.17 	the property is located that the property has been acquired.

3.18 	EFFECTIVE DATE. This section is effective the day
3.19 	following final enactment.

3.20 	Sec. 3. Minnesota Statutes 2004, section 272.02,
3.21 	subdivision 7, is amended to read:
3.22 		Subd. 7.Institutions of public charity.  Institutions of
3.23 	purely public charity are exempt except parcels of property
3.24 	containing structures and the structures described in section
3.25 	273.13, subdivision 25, paragraph (e), other than those that
3.26 	qualify for exemption under subdivision 26. In determining
3.27 	whether rental housing property qualifies for exemption under
3.28 	this subdivision, the following are not gifts or donations to
3.29 	the owner of the rental housing:
3.30 	(1) rent assistance provided by the government to or on
3.31 	behalf of tenants; and 
3.32 	(2) financing assistance or tax credits provided by the
3.33 	government to the owner on condition that specific units or a
3.34 	specific quantity of units be set aside for persons or families
3.35 	with certain income characteristics.
3.36 	
EFFECTIVE DATE. This section is effective for taxes
4.1 	payable in 2004 and thereafter.

4.2 	Sec. 4. Minnesota Statutes 2004, section 272.02,
4.3 	subdivision 22, is amended to read:
4.4 		Subd. 22.Wind energy conversion systems.  All real and
4.5 	personal property of a wind energy conversion system as defined
4.6 	in section 272.029, subdivision 2, is exempt from property tax
4.7 	except that the land on which the property is located remains
4.8 	taxable. If approved by the county where the property is
4.9 	located, the value of the land on which the wind energy
4.10 	conversion system is located shall be valued in the same manner
4.11 	as similar land that has not been improved with a wind energy
4.12 	conversion system.  The land shall be classified based on the
4.13 	most probable use of the property if it were not improved with a
4.14 	wind energy conversion system.
4.15 	
EFFECTIVE DATE. This section is effective for assessment
4.16 	year 2005 and thereafter, for taxes payable in 2006 and
4.17 	thereafter.

4.18 	Sec. 5. Minnesota Statutes 2004, section 272.02,
4.19 	subdivision 73, as added by Laws 2005, chapter 151, article 5,
4.20 	section 6, is amended to read:
4.21 		Subd. 73.Property subject to taconite production tax or
4.22 	net proceeds tax. (a) Real and personal property described in
4.23 	section 298.25 is exempt to the extent the tax on taconite and
4.24 	iron sulphides under section 298.24 is described in section
4.25 	298.25 as being in lieu of other taxes on such property.  This
4.26 	exemption applies for taxes payable in each year that the tax
4.27 	under section 298.24 is payable with respect to such property.
4.28 	(b) Deposits of mineral, metal, or energy resources the
4.29 	mining of which is subject to taxation under section 298.015 are
4.30 	exempt. This exemption applies for taxes payable in each year
4.31 	that the tax under section 298.015 is payable with respect to
4.32 	such property.
4.33 	
EFFECTIVE DATE. This section is effective the day
4.34 	following final enactment.

4.35 	Sec. 6. Minnesota Statutes 2004, section 272.02, is
4.36 	amended by adding a subdivision to read:
5.1 		Subd. 82.Biomass electric generation facility; personal
5.2 	property. (a) Notwithstanding subdivision 9, clause (a),
5.3 	attached machinery and other personal property which is a part
5.4 	of an electric generation facility, including remote boilers
5.5 	that comprise part of the district heating system, generating up
5.6 	to 30 megawatts of installed capacity and that meets the
5.7 	requirements of this subdivision is exempt.  At the time of
5.8 	construction, the facility must:
5.9 	(1) be designed to utilize a minimum 90 percent waste
5.10 	biomass as a fuel;
5.11 	(2) not be owned by a public utility as defined in section
5.12 	216B.02, subdivision 4;
5.13 	(3) be located within a city of the first class and have
5.14 	its primary location at a former garbage transfer station; and 
5.15 	(4) be designed to have capability to provide baseload
5.16 	energy and district heating.
5.17 	(b) Construction of the facility must be commenced after
5.18 	January 1, 2004, and before January 1, 2008.  Property eligible
5.19 	for this exemption does not include electric transmission lines
5.20 	and interconnections or gas pipelines and interconnections
5.21 	appurtenant to the property or the facility.
5.22 	
EFFECTIVE DATE. This section is effective for assessment
5.23 	year 2005, taxes payable in 2006, and thereafter.

5.24 	Sec. 7. Minnesota Statutes 2004, section 273.0755, is
5.25 	amended to read:
5.26 	273.0755 TRAINING AND EDUCATION OF PROPERTY TAX
5.27 	PERSONNEL.
5.28 	(a) Beginning with the four-year period starting on July 1,
5.29 	2000, every person licensed by the state Board of Assessors at
5.30 	the Accredited Minnesota Assessor level or higher, shall
5.31 	successfully complete a week-long Minnesota laws course
5.32 	sponsored by the Department of Revenue at least once in every
5.33 	four-year period.  An assessor need not attend the course if
5.34 	they successfully pass the test for the course.
5.35 	(b) The commissioner of revenue may require that each
5.36 	county, and each city for which the city assessor performs the
6.1 	duties of county assessor, have (i) a person on the assessor's
6.2 	staff who is certified by the Department of Revenue in sales
6.3 	ratio calculations, (ii) an officer or employee who is certified
6.4 	by the Department of Revenue in tax calculations, and (iii) an
6.5 	officer or employee who is certified by the Department of
6.6 	Revenue in the proper preparation of abstracts of assessment.
6.7 	The commissioner of revenue may require that each county have an
6.8 	officer or employee who is certified by the Department of
6.9 	Revenue in the proper preparation of abstracts of tax lists.
6.10 	(c) Beginning with the four-year educational licensing
6.11 	period starting on July 1, 2004, every Minnesota assessor
6.12 	licensed by the State Board of Assessors must attend and
6.13 	participate in a seminar that focuses on ethics, professional
6.14 	conduct and the need for standardized assessment practices
6.15 	developed and presented by the commissioner of revenue.  This
6.16 	requirement must be met at least once in every subsequent
6.17 	four-year period.  This requirement applies to all assessors
6.18 	licensed for one year or more in the four-year period.

6.19 	EFFECTIVE DATE. This section is effective the day
6.20 	following final enactment.

6.21 	Sec. 8. Minnesota Statutes 2004, section 273.11,
6.22 	subdivision 1a, is amended to read:
6.23 		Subd. 1a.Limited market value.  In the case of all
6.24 	property classified as agricultural homestead or nonhomestead,
6.25 	residential homestead or nonhomestead, timber, or noncommercial
6.26 	seasonal residential recreational, the assessor shall compare
6.27 	the value with the taxable portion of the value determined in
6.28 	the preceding assessment.
6.29 	For assessment year 2002, the amount of the increase shall
6.30 	not exceed the greater of (1) ten percent of the value in the
6.31 	preceding assessment, or (2) 15 percent of the difference
6.32 	between the current assessment and the preceding assessment.
6.33 	For assessment year 2003, the amount of the increase shall
6.34 	not exceed the greater of (1) 12 percent of the value in the
6.35 	preceding assessment, or (2) 20 percent of the difference
6.36 	between the current assessment and the preceding assessment.
7.1 	For assessment year years 2004, 2005, and 2006, the amount
7.2 	of the increase shall not exceed the greater of (1) 15 percent
7.3 	of the value in the preceding assessment, or (2) 25 percent of
7.4 	the difference between the current assessment and the preceding
7.5 	assessment.
7.6 	For assessment year 2005 2007, the amount of the increase
7.7 	shall not exceed the greater of (1) 15 percent of the value in
7.8 	the preceding assessment, or (2) 33 percent of the difference
7.9 	between the current assessment and the preceding assessment.
7.10 	For assessment year 2006 2008, the amount of the increase
7.11 	shall not exceed the greater of (1) 15 percent of the value in
7.12 	the preceding assessment, or (2) 50 percent of the difference
7.13 	between the current assessment and the preceding assessment.
7.14 	This limitation shall not apply to increases in value due
7.15 	to improvements.  For purposes of this subdivision, the term
7.16 	"assessment" means the value prior to any exclusion under
7.17 	subdivision 16.
7.18 	The provisions of this subdivision shall be in effect
7.19 	through assessment year 2006 2008 as provided in this
7.20 	subdivision.
7.21 	For purposes of the assessment/sales ratio study conducted
7.22 	under section 127A.48, and the computation of state aids paid
7.23 	under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and
7.24 	477A, market values and net tax capacities determined under this
7.25 	subdivision and subdivision 16, shall be used.
7.26 	
EFFECTIVE DATE. This section is effective for assessment
7.27 	years 2005 through 2008, for taxes payable in 2006 through 2009.

7.28 	Sec. 9. Minnesota Statutes 2004, section 273.11, is
7.29 	amended by adding a subdivision to read:
7.30 		Subd. 21.Valuation reduction for homestead property
7.31 	damaged by mold. (a) The owner of homestead property may apply
7.32 	in writing to the assessor for a reduction in the market value
7.33 	of the property that has been damaged by mold.  The notification
7.34 	must include the estimated cost to cure the mold condition
7.35 	provided by a licensed contractor.  The estimated cost must be
7.36 	at least $20,000.  Upon completion of the work, the owner must
8.1 	file an application on a form prescribed by the commissioner of
8.2 	revenue, accompanied by a copy of the contractor's estimate.
8.3 	(b) If the conditions in paragraph (a) are met, the county
8.4 	board must grant a reduction in the market value of the
8.5 	homestead dwelling equal to the estimated cost to cure the mold
8.6 	condition.  If a property owner applies for a reduction under
8.7 	this subdivision between January 1 and June 30 of any year, the
8.8 	reduction applies for taxes payable in the following year.  If a
8.9 	property owner applies for a reduction under this subdivision
8.10 	between July 1 and December 31 of any year, the reduction
8.11 	applies for taxes payable in the second following year.
8.12 	(c) A denial of a reduction under this section by the
8.13 	county board may be appealed to the tax court.  If the county
8.14 	board takes no action on the application within 90 days after
8.15 	its receipt, it is considered an approval.
8.16 	(d) For purposes of subdivision 1a, in the assessment year
8.17 	following the assessment year when a valuation reduction has
8.18 	occurred under this section, any market value added by the
8.19 	assessor to the property resulting from curing the mold
8.20 	condition must be considered an increase in value due to new
8.21 	construction.
8.22 	
EFFECTIVE DATE. This section is effective for
8.23 	applications filed on September 1, 2005, and thereafter.

8.24 	Sec. 10. Minnesota Statutes 2004, section 273.11, is
8.25 	amended by adding a subdivision to read:
8.26 		Subd. 22.Lead hazard market value reduction. Owners of
8.27 	property classified as class 1a, 1b, 1c, 2a, 4b, 4bb, or 4d
8.28 	under section 273.13 may apply for a lead hazard valuation
8.29 	reduction, provided that the property is located in a city which
8.30 	has authorized valuation reductions under this subdivision.  A
8.31 	city that authorizes reductions under this subdivision must
8.32 	establish guidelines for qualifying lead hazard reduction
8.33 	projects and must designate an agency within the city to issue
8.34 	certificates of completion of qualifying projects.  For purposes
8.35 	of this subdivision, "lead hazard reduction" has the same
8.36 	meaning as in section 144.9501, subdivision 17.
9.1 	The property owner must obtain a certificate from the
9.2 	agency stating (1) that the project has been completed and (2)
9.3 	the total cost incurred by the owner, which must be at least
9.4 	$3,000.  Only projects originating after July 1, 2005, and
9.5 	completed before July 1, 2010, qualify for a reduction under
9.6 	this subdivision.  The property owner shall apply for the
9.7 	valuation reduction to the assessor on a form prescribed by the
9.8 	assessor accompanied by a copy of the certificate of completion
9.9 	from the agency.
9.10 	A qualifying property is eligible for a one-year valuation
9.11 	reduction equal to the actual cost incurred, to a maximum of
9.12 	$20,000.  If a property owner applies to the assessor for the
9.13 	valuation reduction under this subdivision between January 1 and
9.14 	June 30 of any year, the reduction applies for taxes payable in
9.15 	the following year.  If a property owner applies to the assessor
9.16 	for the valuation reduction under this subdivision between July
9.17 	1 and December 31, the reduction applies for taxes payable in
9.18 	the second following year.  For purposes of subdivision 1a, any
9.19 	additional market value resulting from the lead hazard removal
9.20 	must be considered an increase in value due to new construction.
9.21 	
EFFECTIVE DATE. This section is effective the day
9.22 	following final enactment.

9.23 	Sec. 11. Minnesota Statutes 2004, section 273.112,
9.24 	subdivision 3, is amended to read:
9.25 		Subd. 3.Requirements.  Real estate shall be entitled to
9.26 	valuation and tax deferment under this section only if it is:
9.27 	(a) actively and exclusively devoted to golf, skiing, lawn
9.28 	bowling, croquet, polo,or archery or firearms range
9.29 	recreational use or other recreational uses carried on at the
9.30 	establishment;
9.31 	(b) five acres in size or more, except in the case of a
9.32 	lawn bowling or croquet green or an archery or firearms range;
9.33 	(c)(1) operated by private individuals or, in the case of a
9.34 	lawn bowling or croquet green, by private individuals or
9.35 	corporations, and open to the public; or
9.36 	(2) operated by firms or corporations for the benefit of
10.1 	employees or guests; or
10.2 	(3) operated by private clubs having a membership of 50 or
10.3 	more or open to the public, provided that the club does not
10.4 	discriminate in membership requirements or selection on the
10.5 	basis of sex or marital status; and
10.6 	(d) made available for use in the case of real estate
10.7 	devoted to golf without discrimination on the basis of sex
10.8 	during the time when the facility is open to use by the public
10.9 	or by members, except that use for golf may be restricted on the
10.10 	basis of sex no more frequently than one, or part of one,
10.11 	weekend each calendar month for each sex and no more than two,
10.12 	or part of two, weekdays each week for each sex.
10.13 	If a golf club membership allows use of golf course
10.14 	facilities by more than one adult per membership, the use must
10.15 	be equally available to all adults entitled to use of the golf
10.16 	course under the membership, except that use may be restricted
10.17 	on the basis of sex as permitted in this section.  Memberships
10.18 	that permit play during restricted times may be allowed only if
10.19 	the restricted times apply to all adults using the membership.
10.20 	A golf club may not offer a membership or golfing privileges to
10.21 	a spouse of a member that provides greater or less access to the
10.22 	golf course than is provided to that person's spouse under the
10.23 	same or a separate membership in that club, except that the
10.24 	terms of a membership may provide that one spouse may have no
10.25 	right to use the golf course at any time while the other spouse
10.26 	may have either limited or unlimited access to the golf course.
10.27 	A golf club may have or create an individual membership
10.28 	category which entitles a member for a reduced rate to play
10.29 	during restricted hours as established by the club.  The club
10.30 	must have on record a written request by the member for such
10.31 	membership.
10.32 	A golf club that has food or beverage facilities or
10.33 	services must allow equal access to those facilities and
10.34 	services for both men and women members in all membership
10.35 	categories at all times.  Nothing in this paragraph shall be
10.36 	construed to require service or access to facilities to persons
11.1 	under the age of 21 years or require any act that would violate
11.2 	law or ordinance regarding sale, consumption, or regulation of
11.3 	alcoholic beverages.
11.4 	For purposes of this subdivision and subdivision 7a,
11.5 	discrimination means a pattern or course of conduct and not
11.6 	linked to an isolated incident.
11.7 	
EFFECTIVE DATE. This section is effective for taxes
11.8 	levied in 2005, payable in 2006, and thereafter.

11.9 	Sec. 12. Minnesota Statutes 2004, section 273.124,
11.10 	subdivision 1, is amended to read:
11.11 		Subdivision 1.General rule.  (a) Residential real estate
11.12 	that is occupied and used for the purposes of a homestead by its
11.13 	owner, who must be a Minnesota resident, is a residential
11.14 	homestead.
11.15 	Agricultural land, as defined in section 273.13,
11.16 	subdivision 23, that is occupied and used as a homestead by its
11.17 	owner, who must be a Minnesota resident, is an agricultural
11.18 	homestead.
11.19 	Dates for establishment of a homestead and homestead
11.20 	treatment provided to particular types of property are as
11.21 	provided in this section.
11.22 	Property held by a trustee under a trust is eligible for
11.23 	homestead classification if the requirements under this chapter
11.24 	are satisfied.
11.25 	The assessor shall require proof, as provided in
11.26 	subdivision 13, of the facts upon which classification as a
11.27 	homestead may be determined.  Notwithstanding any other law, the
11.28 	assessor may at any time require a homestead application to be
11.29 	filed in order to verify that any property classified as a
11.30 	homestead continues to be eligible for homestead status.
11.31 	Notwithstanding any other law to the contrary, the Department of
11.32 	Revenue may, upon request from an assessor, verify whether an
11.33 	individual who is requesting or receiving homestead
11.34 	classification has filed a Minnesota income tax return as a
11.35 	resident for the most recent taxable year for which the
11.36 	information is available.
12.1 	When there is a name change or a transfer of homestead
12.2 	property, the assessor may reclassify the property in the next
12.3 	assessment unless a homestead application is filed to verify
12.4 	that the property continues to qualify for homestead
12.5 	classification.
12.6 	(b) For purposes of this section, homestead property shall
12.7 	include property which is used for purposes of the homestead but
12.8 	is separated from the homestead by a road, street, lot,
12.9 	waterway, or other similar intervening property.  The term "used
12.10 	for purposes of the homestead" shall include but not be limited
12.11 	to uses for gardens, garages, or other outbuildings commonly
12.12 	associated with a homestead, but shall not include vacant land
12.13 	held primarily for future development.  In order to receive
12.14 	homestead treatment for the noncontiguous property, the owner
12.15 	must use the property for the purposes of the homestead, and
12.16 	must apply to the assessor, both by the deadlines given in
12.17 	subdivision 9.  After initial qualification for the homestead
12.18 	treatment, additional applications for subsequent years are not
12.19 	required.
12.20 	(c) Residential real estate that is occupied and used for
12.21 	purposes of a homestead by a relative of the owner is a
12.22 	homestead but only to the extent of the homestead treatment that
12.23 	would be provided if the related owner occupied the property.
12.24 	For purposes of this paragraph and paragraph (g), "relative"
12.25 	means a parent, stepparent, child, stepchild, grandparent,
12.26 	grandchild, brother, sister, uncle, aunt, nephew, or niece.
12.27 	This relationship may be by blood or marriage.  Property that
12.28 	has been classified as seasonal residential recreational
12.29 	property at any time during which it has been owned by the
12.30 	current owner or spouse of the current owner will not be
12.31 	reclassified as a homestead unless it is occupied as a homestead
12.32 	by the owner; this prohibition also applies to property that, in
12.33 	the absence of this paragraph, would have been classified as
12.34 	seasonal residential recreational property at the time when the
12.35 	residence was constructed.  Neither the related occupant nor the
12.36 	owner of the property may claim a property tax refund under
13.1 	chapter 290A for a homestead occupied by a relative.  In the
13.2 	case of a residence located on agricultural land, only the
13.3 	house, garage, and immediately surrounding one acre of land
13.4 	shall be classified as a homestead under this paragraph, except
13.5 	as provided in paragraph (d).
13.6 	(d) Agricultural property that is occupied and used for
13.7 	purposes of a homestead by a relative of the owner, is a
13.8 	homestead, only to the extent of the homestead treatment that
13.9 	would be provided if the related owner occupied the property,
13.10 	and only if all of the following criteria are met:
13.11 	(1) the relative who is occupying the agricultural property
13.12 	is a son, daughter, grandson, granddaughter, father, or mother
13.13 	of the owner of the agricultural property or a son, daughter,
13.14 	grandson, or granddaughter of the spouse of the owner of the
13.15 	agricultural property;
13.16 	(2) the owner of the agricultural property must be a
13.17 	Minnesota resident;
13.18 	(3) the owner of the agricultural property must not receive
13.19 	homestead treatment on any other agricultural property in
13.20 	Minnesota; and
13.21 	(4) the owner of the agricultural property is limited to
13.22 	only one agricultural homestead per family under this paragraph.
13.23 	Neither the related occupant nor the owner of the property
13.24 	may claim a property tax refund under chapter 290A for a
13.25 	homestead occupied by a relative qualifying under this
13.26 	paragraph.  For purposes of this paragraph, "agricultural
13.27 	property" means the house, garage, other farm buildings and
13.28 	structures, and agricultural land.
13.29 	Application must be made to the assessor by the owner of
13.30 	the agricultural property to receive homestead benefits under
13.31 	this paragraph.  The assessor may require the necessary proof
13.32 	that the requirements under this paragraph have been met.
13.33 	(e) In the case of property owned by a property owner who
13.34 	is married, the assessor must not deny homestead treatment in
13.35 	whole or in part if only one of the spouses occupies the
13.36 	property and the other spouse is absent due to:  (1) marriage
14.1 	dissolution proceedings, (2) legal separation, (3) employment or
14.2 	self-employment in another location, or (4) other personal
14.3 	circumstances causing the spouses to live separately, not
14.4 	including an intent to obtain two homestead classifications for
14.5 	property tax purposes.  To qualify under clause (3), the
14.6 	spouse's place of employment or self-employment must be at least
14.7 	50 miles distant from the other spouse's place of employment,
14.8 	and the homesteads must be at least 50 miles distant from each
14.9 	other.  Homestead treatment, in whole or in part, shall not be
14.10 	denied to the owner's spouse who previously occupied the
14.11 	residence with the owner if the absence of the owner is due to
14.12 	one of the exceptions provided in this paragraph.
14.13 	(f) The assessor must not deny homestead treatment in whole
14.14 	or in part if:
14.15 	(1) in the case of a property owner who is not married, the
14.16 	owner is absent due to residence in a nursing home, boarding
14.17 	care facility, or an elderly assisted living facility property
14.18 	as defined in section 273.13, subdivision 25a, and the property
14.19 	is not otherwise occupied; or
14.20 	(2) in the case of a property owner who is married, the
14.21 	owner or the owner's spouse or both are absent due to residence
14.22 	in a nursing home, boarding care facility, or an elderly
14.23 	assisted living facility property as defined in section 273.13,
14.24 	subdivision 25a, and the property is not occupied or is occupied
14.25 	only by the owner's spouse.
14.26 	(g) If an individual is purchasing property with the intent
14.27 	of claiming it as a homestead and is required by the terms of
14.28 	the financing agreement to have a relative shown on the deed as
14.29 	a co-owner, the assessor shall allow a full homestead
14.30 	classification.  This provision only applies to first-time
14.31 	purchasers, whether married or single, or to a person who had
14.32 	previously been married and is purchasing as a single individual
14.33 	for the first time.  The application for homestead benefits must
14.34 	be on a form prescribed by the commissioner and must contain the
14.35 	data necessary for the assessor to determine if full homestead
14.36 	benefits are warranted.
15.1 	(h) If residential or agricultural real estate is occupied
15.2 	and used for purposes of a homestead by a child of a deceased
15.3 	owner and the property is subject to jurisdiction of probate
15.4 	court, the child shall receive relative homestead classification
15.5 	under paragraph (c) or (d) to the same extent they would be
15.6 	entitled to it if the owner was still living, until the probate
15.7 	is completed.  For purposes of this paragraph, "child" includes
15.8 	a relationship by blood or by marriage.
15.9 	(i) If a single family home, duplex, or triplex classified
15.10 	as either residential homestead or agricultural homestead is
15.11 	also used to provide licensed child care, the portion of the
15.12 	property used for licensed child care must be classified as a
15.13 	part of the homestead property.
15.14 	
EFFECTIVE DATE. This section is effective in assessment
15.15 	year 2005 and thereafter, for taxes payable in 2006, and
15.16 	thereafter.

15.17 	Sec. 13. Minnesota Statutes 2004, section 273.125,
15.18 	subdivision 8, is amended to read:
15.19 		Subd. 8.Manufactured homes; sectional structures.  (a)
15.20 	In this section, "manufactured home" means a structure
15.21 	transportable in one or more sections, which is built on a
15.22 	permanent chassis, and designed to be used as a dwelling with or
15.23 	without a permanent foundation when connected to the required
15.24 	utilities, and contains the plumbing, heating, air conditioning,
15.25 	and electrical systems in it.  Manufactured home includes any
15.26 	accessory structure that is an addition or supplement to the
15.27 	manufactured home and, when installed, becomes a part of the
15.28 	manufactured home.
15.29 	(b) Except as provided in paragraph (c),a manufactured
15.30 	home that meets each of the following criteria must be valued
15.31 	and assessed as an improvement to real property, the appropriate
15.32 	real property classification applies, and the valuation is
15.33 	subject to review and the taxes payable in the manner provided
15.34 	for real property:
15.35 	(1) the owner of the unit holds title to the land on which
15.36 	it is situated;
16.1 	(2) the unit is affixed to the land by a permanent
16.2 	foundation or is installed at its location in accordance with
16.3 	the Manufactured Home Building Code in sections 327.31 to
16.4 	327.34, and rules adopted under those sections, or is affixed to
16.5 	the land like other real property in the taxing district; and
16.6 	(3) the unit is connected to public utilities, has a well
16.7 	and septic tank system, or is serviced by water and sewer
16.8 	facilities comparable to other real property in the taxing
16.9 	district.
16.10 	(c) A manufactured home that meets each of the following
16.11 	criteria must be assessed at the rate provided by the
16.12 	appropriate real property classification but must be treated as
16.13 	personal property, and the valuation is subject to review and
16.14 	the taxes payable in the manner provided in this section:
16.15 	(1) the owner of the unit is a lessee of the land under the
16.16 	terms of a lease, or the unit is located in a manufactured home
16.17 	park but is not the homestead of the park owner;
16.18 	(2) the unit is affixed to the land by a permanent
16.19 	foundation or is installed at its location in accordance with
16.20 	the Manufactured Home Building Code contained in sections 327.31
16.21 	to 327.34, and the rules adopted under those sections, or is
16.22 	affixed to the land like other real property in the taxing
16.23 	district; and
16.24 	(3) the unit is connected to public utilities, has a well
16.25 	and septic tank system, or is serviced by water and sewer
16.26 	facilities comparable to other real property in the taxing
16.27 	district.
16.28 	(d) Sectional structures must be valued and assessed as an
16.29 	improvement to real property if the owner of the structure holds
16.30 	title to the land on which it is located or is a qualifying
16.31 	lessee of the land under section 273.19.  In this paragraph
16.32 	"sectional structure" means a building or structural unit that
16.33 	has been in whole or substantial part manufactured or
16.34 	constructed at an off-site location to be wholly or partially
16.35 	assembled on-site alone or with other units and attached to a
16.36 	permanent foundation.
17.1 	(e) The commissioner of revenue may adopt rules under the
17.2 	Administrative Procedure Act to establish additional criteria
17.3 	for the classification of manufactured homes and sectional
17.4 	structures under this subdivision.
17.5 	(f) A storage shed, deck, or similar improvement
17.6 	constructed on property that is leased or rented as a site for a
17.7 	manufactured home, sectional structure, park trailer, or travel
17.8 	trailer is taxable as provided in this section.  In the case of
17.9 	property that is leased or rented as a site for a travel
17.10 	trailer, a storage shed, deck, or similar improvement on the
17.11 	site that is considered personal property under this paragraph
17.12 	is taxable only if its total estimated market value is over
17.13 	$500.  The property is taxable as personal property to the
17.14 	lessee of the site if it is not owned by the owner of the site.
17.15 	The property is taxable as real estate if it is owned by the
17.16 	owner of the site.  As a condition of permitting the owner of
17.17 	the manufactured home, sectional structure, park trailer, or
17.18 	travel trailer to construct improvements on the leased or rented
17.19 	site, the owner of the site must obtain the permanent home
17.20 	address of the lessee or user of the site.  The site owner must
17.21 	provide the name and address to the assessor upon request.
17.22 	
EFFECTIVE DATE. For purposes of Minnesota Statutes,
17.23 	sections 272.12 and 272.121, this section is effective the day
17.24 	following final enactment.  For all other purposes, this section
17.25 	is effective beginning with taxes payable in 2006, except that
17.26 	for any property treated as real property under this section for
17.27 	the 2005 assessment that will be treated as personal property
17.28 	under this section for the 2006 assessment, an adjustment must
17.29 	be made to the 2005 assessment roll on or before September 1,
17.30 	2005, to reflect those changes.

17.31 	Sec. 14. [273.128] CERTIFICATION OF LOW-INCOME RENTAL
17.32 	PROPERTY.
17.33 		Subdivision 1.Requirement. Low-income rental property
17.34 	classified as class 4d under section 273.13, subdivision 25, is
17.35 	entitled to valuation under this section if at least 75 percent
17.36 	of the units in the rental housing property meet any of the
18.1 	following qualifications:
18.2 	(1) the units are subject to a housing assistance payments
18.3 	contract under section 8 of the United States Housing Act of
18.4 	1937, as amended;
18.5 	(2) the units are rent-restricted and income-restricted
18.6 	units of a qualified low-income housing project receiving tax
18.7 	credits under section 42(g) of the Internal Revenue Code of
18.8 	1986, as amended;
18.9 	(3) the units are financed by the Rural Housing Service of
18.10 	the United States Department of Agriculture and receive payments
18.11 	under the rental assistance program pursuant to section 521(a)
18.12 	of the Housing Act of 1949, as amended; or 
18.13 	(4) the units are subject to rent and income restrictions
18.14 	under the terms of financial assistance provided to the rental
18.15 	housing property by the federal government or the state of
18.16 	Minnesota as evidenced by a document recorded against the
18.17 	property.
18.18 	The restrictions must require assisted units to be occupied
18.19 	by residents whose household income at the time of initial
18.20 	occupancy does not exceed 60 percent of the greater of area or
18.21 	state median income, adjusted for family size, as determined by
18.22 	the United States Department of Housing and Urban Development.
18.23 	The restriction must also require the rents for assisted units
18.24 	to not exceed 30 percent of 60 percent of the greater of area or
18.25 	state median income, adjusted for family size, as determined by
18.26 	the United States Department of Housing and Urban Development.
18.27 		Subd. 2.Application. (a) Application for certification
18.28 	under this section must be filed by March 31 of the levy year,
18.29 	or at a later date if the Housing Finance Agency deems
18.30 	practicable.  The application must be filed with the Housing
18.31 	Finance Agency, on a form prescribed by the agency, and must
18.32 	contain the information required by the Housing Finance Agency.
18.33 	(b) Each application must include:
18.34 	(1) the property tax identification number; and 
18.35 	(2) evidence that the property meets the requirements of
18.36 	subdivision 1.
19.1 	(c) The Housing Finance Agency may charge an application
19.2 	fee approximately equal to the costs of processing and reviewing
19.3 	the applications but not to exceed $10 per unit.  If imposed,
19.4 	the applicant must pay the application fee to the Housing
19.5 	Finance Agency.  The fee must be deposited in the housing
19.6 	development fund.
19.7 		Subd. 3.Certification. By June 1 of each levy year, the
19.8 	Housing Finance Agency must certify to the appropriate county or
19.9 	city assessors, the specific properties that are qualified under
19.10 	this section and the number of units in the building that
19.11 	qualify.  In making the certification, the Housing Finance
19.12 	Agency may rely on the application and any other supporting
19.13 	information that the agency deems necessary from the property
19.14 	owner.
19.15 	
EFFECTIVE DATE. This section is effective for taxes
19.16 	payable in 2006 and subsequent years, except that the
19.17 	application date in subdivision 2 is extended to August 31,
19.18 	2005, and the certification date in subdivision 3 is extended to
19.19 	September 30, 2005.

19.20 	Sec. 15. Minnesota Statutes 2004, section 273.13,
19.21 	subdivision 22, is amended to read:
19.22 		Subd. 22.Class 1.  (a) Except as provided in subdivision
19.23 	23 and in paragraphs (b) and (c), real estate which is
19.24 	residential and used for homestead purposes is class 1a.  In the
19.25 	case of a duplex or triplex in which one of the units is used
19.26 	for homestead purposes, the entire property is deemed to be used
19.27 	for homestead purposes.  The market value of class 1a property
19.28 	must be determined based upon the value of the house, garage,
19.29 	and land.
19.30 	The first $500,000 of market value of class 1a property has
19.31 	a net class rate of one percent of its market value; and the
19.32 	market value of class 1a property that exceeds $500,000 has a
19.33 	class rate of 1.25 percent of its market value.
19.34 	(b) Class 1b property includes homestead real estate or
19.35 	homestead manufactured homes used for the purposes of a
19.36 	homestead by
20.1 	(1) any person who is blind as defined in section 256D.35,
20.2 	or the blind person and the blind person's spouse; or
20.3 	(2) any person, hereinafter referred to as "veteran," who:
20.4 	(i) served in the active military or naval service of the
20.5 	United States; and
20.6 	(ii) is entitled to compensation under the laws and
20.7 	regulations of the United States for permanent and total
20.8 	service-connected disability due to the loss, or loss of use, by
20.9 	reason of amputation, ankylosis, progressive muscular
20.10 	dystrophies, or paralysis, of both lower extremities, such as to
20.11 	preclude motion without the aid of braces, crutches, canes, or a
20.12 	wheelchair; and
20.13 	(iii) has acquired a special housing unit with special
20.14 	fixtures or movable facilities made necessary by the nature of
20.15 	the veteran's disability, or the surviving spouse of the
20.16 	deceased veteran for as long as the surviving spouse retains the
20.17 	special housing unit as a homestead; or
20.18 	(3) any person who is permanently and totally disabled.
20.19 	Property is classified and assessed under clause (3) only
20.20 	if the government agency or income-providing source certifies,
20.21 	upon the request of the homestead occupant, that the homestead
20.22 	occupant satisfies the disability requirements of this paragraph.
20.23 	Property is classified and assessed pursuant to clause (1)
20.24 	only if the commissioner of revenue certifies to the assessor
20.25 	that the homestead occupant satisfies the requirements of this
20.26 	paragraph.
20.27 	Permanently and totally disabled for the purpose of this
20.28 	subdivision means a condition which is permanent in nature and
20.29 	totally incapacitates the person from working at an occupation
20.30 	which brings the person an income.  The first $32,000 market
20.31 	value of class 1b property has a net class rate of .45 percent
20.32 	of its market value.  The remaining market value of class 1b
20.33 	property has a class rate using the rates for class 1a or class
20.34 	2a property, whichever is appropriate, of similar market value.
20.35 	(c) Class 1c property is commercial use real property that
20.36 	abuts a lakeshore line and is devoted to temporary and seasonal
21.1 	residential occupancy for recreational purposes but not devoted
21.2 	to commercial purposes for more than 250 days in the year
21.3 	preceding the year of assessment, and that includes a portion
21.4 	used as a homestead by the owner, which includes a dwelling
21.5 	occupied as a homestead by a shareholder of a corporation that
21.6 	owns the resort, a partner in a partnership that owns the
21.7 	resort, or a member of a limited liability company that owns the
21.8 	resort even if the title to the homestead is held by the
21.9 	corporation, partnership, or limited liability company.  For
21.10 	purposes of this clause, property is devoted to a commercial
21.11 	purpose on a specific day if any portion of the property,
21.12 	excluding the portion used exclusively as a homestead, is used
21.13 	for residential occupancy and a fee is charged for residential
21.14 	occupancy. The portion of the property used as a homestead by
21.15 	the owner has the same class rates as class 1a property under
21.16 	paragraph (a).  The remainder of the property is classified as
21.17 	follows:the first $500,000 of market value of class 1c
21.18 	property has a class rate of one percent, and is tier I,the
21.19 	remaining next $1,700,000 of market value of class 1c property
21.20 	has a class rate of one percent, with the following limitation:
21.21 	the area of the property must not exceed 100 feet of lakeshore
21.22 	footage for each cabin or campsite located on the property up to
21.23 	a total of 800 feet and 500 feet in depth, measured away from
21.24 	the lakeshore.is tier II, and any remaining market value is
21.25 	tier III.  The class rates for class 1c are:  tier I, 0.55
21.26 	percent; tier II, 1.0 percent; and tier III, 1.25 percent.If
21.27 	any portion of the a class 1c resort property is classified as
21.28 	class 4c under subdivision 25 has any market value in tier III,
21.29 	the entire property must meet the requirements of subdivision
21.30 	25, paragraph (d), clause (1), to qualify for class 1c treatment
21.31 	under this paragraph.
21.32 	(d) Class 1d property includes structures that meet all of
21.33 	the following criteria:
21.34 	(1) the structure is located on property that is classified
21.35 	as agricultural property under section 273.13, subdivision 23;
21.36 	(2) the structure is occupied exclusively by seasonal farm
22.1 	workers during the time when they work on that farm, and the
22.2 	occupants are not charged rent for the privilege of occupying
22.3 	the property, provided that use of the structure for storage of
22.4 	farm equipment and produce does not disqualify the property from
22.5 	classification under this paragraph;
22.6 	(3) the structure meets all applicable health and safety
22.7 	requirements for the appropriate season; and
22.8 	(4) the structure is not salable as residential property
22.9 	because it does not comply with local ordinances relating to
22.10 	location in relation to streets or roads.
22.11 	The market value of class 1d property has the same class
22.12 	rates as class 1a property under paragraph (a).
22.13 	
EFFECTIVE DATE. This section is effective for taxes
22.14 	levied in 2005, payable in 2006, and thereafter.

22.15 	Sec. 16. Minnesota Statutes 2004, section 273.13,
22.16 	subdivision 25, as amended by Laws 2005, chapter 151, article 3,
22.17 	section 12, is amended to read:
22.18 		Subd. 25.Class 4. (a) Class 4a is residential real
22.19 	estate containing four or more units and used or held for use by
22.20 	the owner or by the tenants or lessees of the owner as a
22.21 	residence for rental periods of 30 days or more, excluding
22.22 	property qualifying for class 4d.  Class 4a also includes
22.23 	hospitals licensed under sections 144.50 to 144.56, other than
22.24 	hospitals exempt under section 272.02, and contiguous property
22.25 	used for hospital purposes, without regard to whether the
22.26 	property has been platted or subdivided.  The market value of
22.27 	class 4a property has a class rate of 1.25 percent.
22.28 	(b) Class 4b includes:
22.29 	(1) residential real estate containing less than four units
22.30 	that does not qualify as class 4bb, other than seasonal
22.31 	residential recreational property;
22.32 	(2) manufactured homes not classified under any other
22.33 	provision;
22.34 	(3) a dwelling, garage, and surrounding one acre of
22.35 	property on a nonhomestead farm classified under subdivision 23,
22.36 	paragraph (b) containing two or three units; and
23.1 	(4) unimproved property that is classified residential as
23.2 	determined under subdivision 33.
23.3 	The market value of class 4b property has a class rate of
23.4 	1.25 percent.
23.5 	(c) Class 4bb includes:
23.6 	(1) nonhomestead residential real estate containing one
23.7 	unit, other than seasonal residential recreational property; and
23.8 	(2) a single family dwelling, garage, and surrounding one
23.9 	acre of property on a nonhomestead farm classified under
23.10 	subdivision 23, paragraph (b).
23.11 	Class 4bb property has the same class rates as class 1a
23.12 	property under subdivision 22.
23.13 	Property that has been classified as seasonal residential
23.14 	recreational property at any time during which it has been owned
23.15 	by the current owner or spouse of the current owner does not
23.16 	qualify for class 4bb.
23.17 	(d) Class 4c property includes:
23.18 	(1) except as provided in subdivision 22, paragraph (c),
23.19 	real property devoted to temporary and seasonal residential
23.20 	occupancy for recreation purposes, including real property
23.21 	devoted to temporary and seasonal residential occupancy for
23.22 	recreation purposes and not devoted to commercial purposes for
23.23 	more than 250 days in the year preceding the year of
23.24 	assessment.  For purposes of this clause, property is devoted to
23.25 	a commercial purpose on a specific day if any portion of the
23.26 	property is used for residential occupancy, and a fee is charged
23.27 	for residential occupancy.  In order for a property to be
23.28 	classified as class 4c, seasonal residential recreational for
23.29 	commercial purposes, at least 40 percent of the annual gross
23.30 	lodging receipts related to the property must be from business
23.31 	conducted during 90 consecutive days and either (i) at least 60
23.32 	percent of all paid bookings by lodging guests during the year
23.33 	must be for periods of at least two consecutive nights; or (ii)
23.34 	at least 20 percent of the annual gross receipts must be from
23.35 	charges for rental of fish houses, boats and motors,
23.36 	snowmobiles, downhill or cross-country ski equipment, or charges
24.1 	for marina services, launch services, and guide services, or the
24.2 	sale of bait and fishing tackle.  For purposes of this
24.3 	determination, a paid booking of five or more nights shall be
24.4 	counted as two bookings.  Class 4c also includes commercial use
24.5 	real property used exclusively for recreational purposes in
24.6 	conjunction with class 4c property devoted to temporary and
24.7 	seasonal residential occupancy for recreational purposes, up to
24.8 	a total of two acres, provided the property is not devoted to
24.9 	commercial recreational use for more than 250 days in the year
24.10 	preceding the year of assessment and is located within two miles
24.11 	of the class 4c property with which it is used. Class 4c
24.12 	property classified in this clause also includes the remainder
24.13 	of class 1c resorts provided that the entire property including
24.14 	that portion of the property classified as class 1c also meets
24.15 	the requirements for class 4c under this clause; otherwise the
24.16 	entire property is classified as class 3.Owners of real
24.17 	property devoted to temporary and seasonal residential occupancy
24.18 	for recreation purposes and all or a portion of which was
24.19 	devoted to commercial purposes for not more than 250 days in the
24.20 	year preceding the year of assessment desiring classification as
24.21 	class 1c or 4c, must submit a declaration to the assessor
24.22 	designating the cabins or units occupied for 250 days or less in
24.23 	the year preceding the year of assessment by January 15 of the
24.24 	assessment year.  Those cabins or units and a proportionate
24.25 	share of the land on which they are located will be designated
24.26 	class 1c or 4c as otherwise provided.  The remainder of the
24.27 	cabins or units and a proportionate share of the land on which
24.28 	they are located will be designated as class 3a.  The owner of
24.29 	property desiring designation as class 1c or 4c property must
24.30 	provide guest registers or other records demonstrating that the
24.31 	units for which class 1c or 4c designation is sought were not
24.32 	occupied for more than 250 days in the year preceding the
24.33 	assessment if so requested.  The portion of a property operated
24.34 	as a (1) restaurant, (2) bar, (3) gift shop, and (4) other
24.35 	nonresidential facility operated on a commercial basis not
24.36 	directly related to temporary and seasonal residential occupancy
25.1 	for recreation purposes shall not qualify for class 1c or 4c;
25.2 	(2) qualified property used as a golf course if:
25.3 	(i) it is open to the public on a daily fee basis.  It may
25.4 	charge membership fees or dues, but a membership fee may not be
25.5 	required in order to use the property for golfing, and its green
25.6 	fees for golfing must be comparable to green fees typically
25.7 	charged by municipal courses; and
25.8 	(ii) it meets the requirements of section 273.112,
25.9 	subdivision 3, paragraph (d).
25.10 	A structure used as a clubhouse, restaurant, or place of
25.11 	refreshment in conjunction with the golf course is classified as
25.12 	class 3a property;
25.13 	(3) real property up to a maximum of one acre of land owned
25.14 	by a nonprofit community service oriented organization; provided
25.15 	that the property is not used for a revenue-producing activity
25.16 	for more than six days in the calendar year preceding the year
25.17 	of assessment and the property is not used for residential
25.18 	purposes on either a temporary or permanent basis.  For purposes
25.19 	of this clause, a "nonprofit community service oriented
25.20 	organization" means any corporation, society, association,
25.21 	foundation, or institution organized and operated exclusively
25.22 	for charitable, religious, fraternal, civic, or educational
25.23 	purposes, and which is exempt from federal income taxation
25.24 	pursuant to section 501(c)(3), (10), or (19) of the Internal
25.25 	Revenue Code of 1986, as amended through December 31, 1990.  For
25.26 	purposes of this clause, "revenue-producing activities" shall
25.27 	include but not be limited to property or that portion of the
25.28 	property that is used as an on-sale intoxicating liquor or 3.2
25.29 	percent malt liquor establishment licensed under chapter 340A, a
25.30 	restaurant open to the public, bowling alley, a retail store,
25.31 	gambling conducted by organizations licensed under chapter 349,
25.32 	an insurance business, or office or other space leased or rented
25.33 	to a lessee who conducts a for-profit enterprise on the
25.34 	premises.  Any portion of the property which is used for
25.35 	revenue-producing activities for more than six days in the
25.36 	calendar year preceding the year of assessment shall be assessed
26.1 	as class 3a.  The use of the property for social events open
26.2 	exclusively to members and their guests for periods of less than
26.3 	24 hours, when an admission is not charged nor any revenues are
26.4 	received by the organization shall not be considered a
26.5 	revenue-producing activity;
26.6 	(4) postsecondary student housing of not more than one acre
26.7 	of land that is owned by a nonprofit corporation organized under
26.8 	chapter 317A and is used exclusively by a student cooperative,
26.9 	sorority, or fraternity for on-campus housing or housing located
26.10 	within two miles of the border of a college campus;
26.11 	(5) manufactured home parks as defined in section 327.14,
26.12 	subdivision 3;
26.13 	(6) real property that is actively and exclusively devoted
26.14 	to indoor fitness, health, social, recreational, and related
26.15 	uses, is owned and operated by a not-for-profit corporation, and
26.16 	is located within the metropolitan area as defined in section
26.17 	473.121, subdivision 2;
26.18 	(7) a leased or privately owned noncommercial aircraft
26.19 	storage hangar not exempt under section 272.01, subdivision 2,
26.20 	and the land on which it is located, provided that:
26.21 	(i) the land is on an airport owned or operated by a city,
26.22 	town, county, Metropolitan Airports Commission, or group
26.23 	thereof; and
26.24 	(ii) the land lease, or any ordinance or signed agreement
26.25 	restricting the use of the leased premise, prohibits commercial
26.26 	activity performed at the hangar.
26.27 	If a hangar classified under this clause is sold after June
26.28 	30, 2000, a bill of sale must be filed by the new owner with the
26.29 	assessor of the county where the property is located within 60
26.30 	days of the sale;
26.31 	(8) a privately owned noncommercial aircraft storage hangar
26.32 	not exempt under section 272.01, subdivision 2, and the land on
26.33 	which it is located, provided that:
26.34 	(i) the land abuts a public airport; and
26.35 	(ii) the owner of the aircraft storage hangar provides the
26.36 	assessor with a signed agreement restricting the use of the
27.1 	premises, prohibiting commercial use or activity performed at
27.2 	the hangar; and
27.3 	(9) residential real estate, a portion of which is used by
27.4 	the owner for homestead purposes, and that is also a place of
27.5 	lodging, if all of the following criteria are met:
27.6 	(i) rooms are provided for rent to transient guests that
27.7 	generally stay for periods of 14 or fewer days;
27.8 	(ii) meals are provided to persons who rent rooms, the cost
27.9 	of which is incorporated in the basic room rate;
27.10 	(iii) meals are not provided to the general public except
27.11 	for special events on fewer than seven days in the calendar year
27.12 	preceding the year of the assessment; and
27.13 	(iv) the owner is the operator of the property.
27.14 	The market value subject to the 4c classification under this
27.15 	clause is limited to five rental units.  Any rental units on the
27.16 	property in excess of five, must be valued and assessed as class
27.17 	3a.  The portion of the property used for purposes of a
27.18 	homestead by the owner must be classified as class 1a property
27.19 	under subdivision 22.
27.20 	Class 4c property has a class rate of 1.5 percent of market
27.21 	value, except that (i) each parcel of seasonal residential
27.22 	recreational property not used for commercial purposes has the
27.23 	same class rates as class 4bb property, (ii) manufactured home
27.24 	parks assessed under clause (5) have the same class rate as
27.25 	class 4b property, (iii) commercial-use seasonal residential
27.26 	recreational property has a class rate of one percent for the
27.27 	first $500,000 of market value, which includes any market value
27.28 	receiving the one percent rate under subdivision 22, and 1.25
27.29 	percent for the remaining market value, (iv) the market value of
27.30 	property described in clause (4) has a class rate of one
27.31 	percent, (v) the market value of property described in clauses
27.32 	(2) and (6) has a class rate of 1.25 percent, and (vi) that
27.33 	portion of the market value of property in clause (8) (9) 
27.34 	qualifying for class 4c property has a class rate of 1.25
27.35 	percent.
27.36 	(e) Class 4d property is qualifying low-income rental
28.1 	housing certified to the assessor by the Housing Finance Agency
28.2 	under section 273.128, subdivision 3.  If only a portion of the
28.3 	units in the building qualify as low-income rental housing units
28.4 	as certified under section 273.128, subdivision 3, only the
28.5 	proportion of qualifying units to the total number of units in
28.6 	the building qualify for class 4d.  The remaining portion of the
28.7 	building shall be classified by the assessor based upon its
28.8 	use.  Class 4d also includes the same proportion of land as the
28.9 	qualifying low-income rental housing units are to the total
28.10 	units in the building.  For all properties qualifying as class
28.11 	4d, the market value determined by the assessor must be based on
28.12 	the normal approach to value using normal unrestricted rents.
28.13 	Class 4d property has a class rate of 0.75 percent.
28.14 	
EFFECTIVE DATE. This section is effective for taxes
28.15 	payable in 2006 and subsequent years.

28.16 	Sec. 17. [273.1321] VACANT COMMERCIAL INDUSTRIAL
28.17 	PROPERTIES.
28.18 		Subdivision 1.Authority. A city may establish, by
28.19 	ordinance, a program to encourage redevelopment, provide for
28.20 	better utilization of commercial-industrial property, and
28.21 	eliminate blighting influences by revoking the eligibility of
28.22 	individual commercial-industrial properties to receive the
28.23 	credit authorized under section 273.1398, subdivision 4.  The
28.24 	program may revoke eligibility of a property only if:
28.25 	(1) the property has been vacant, as defined in subdivision
28.26 	3, clause (1), (2), or (3), for three or more consecutive years
28.27 	prior to the current assessment year; or 
28.28 	(2) the property has been vacant as defined under
28.29 	subdivision 3, clause (4), for five or more consecutive years
28.30 	prior to the current assessment year.
28.31 		Subd. 2.Minimum program requirements. The program must
28.32 	provide:
28.33 	(1) standards for determining whether a property is vacant;
28.34 	(2) written assessment notice by the city or county to the
28.35 	property owner informing the owner that the property's
28.36 	eligibility will be revoked;
29.1 	(3) opportunity for the property owner to appeal the
29.2 	revocation at the local and county board of appeal and
29.3 	equalization;
29.4 	(4) timely notice to the county assessor of the property's
29.5 	eligibility revocation, or if the city has a city assessor and
29.6 	the city assessor has revoked the property's eligibility; and 
29.7 	(5) any other provisions the city determines are necessary
29.8 	or appropriate to the operation of the program to achieve its
29.9 	purposes.
29.10 		Subd. 3.Definition of vacant. A program established
29.11 	under this section may provide that a property is vacant if the
29.12 	property is:
29.13 	(1) condemned, dangerous, or having multiple building code
29.14 	violations;
29.15 	(2) condemned and illegally occupied;
29.16 	(3) either occupied or unoccupied, during which time the
29.17 	enforcement officer for the municipality has issued multiple
29.18 	orders to correct nuisance conditions; or 
29.19 	(4) unoccupied and not utilized for a commercial or
29.20 	industrial purpose.
29.21 		Subd. 4.Notice to property owner. The municipality
29.22 	shall give notice to the property owner stating that the
29.23 	property may cease to be eligible for the credit under section
29.24 	273.1398, subdivision 4, unless the property is occupied, the
29.25 	conditions in subdivision 3, clauses (1) to (3), are remedied,
29.26 	and the property is used for a commercial or industrial purpose
29.27 	for at least 180 days during the next 12-month period.
29.28 	
EFFECTIVE DATE. This section is effective for assessment
29.29 	year 2006 and thereafter, for taxes payable in 2007 and
29.30 	thereafter.

29.31 	Sec. 18. Minnesota Statutes 2004, section 274.01,
29.32 	subdivision 1, is amended to read:
29.33 		Subdivision 1.Ordinary board; meetings, deadlines,
29.34 	grievances.  (a) The town board of a town, or the council or
29.35 	other governing body of a city, is the board of appeal and
29.36 	equalization except (1) in cities whose charters provide for a
30.1 	board of equalization or (2) in any city or town that has
30.2 	transferred its local board of review power and duties to the
30.3 	county board as provided in subdivision 3.  The county assessor
30.4 	shall fix a day and time when the board or the board of
30.5 	equalization shall meet in the assessment districts of the
30.6 	county.  Notwithstanding any law or city charter to the
30.7 	contrary, a city board of equalization shall be referred to as a
30.8 	board of appeal and equalization.  On or before February 15 of
30.9 	each year the assessor shall give written notice of the time to
30.10 	the city or town clerk.  Notwithstanding the provisions of any
30.11 	charter to the contrary, the meetings must be held between April
30.12 	1 and May 31 each year.  The clerk shall give published and
30.13 	posted notice of the meeting at least ten days before the date
30.14 	of the meeting.
30.15 	The board shall meet at the office of the clerk to review
30.16 	the assessment and classification of property in the town or
30.17 	city.  No changes in valuation or classification which are
30.18 	intended to correct errors in judgment by the county assessor
30.19 	may be made by the county assessor after the board has adjourned
30.20 	in those cities or towns that hold a local board of review;
30.21 	however, corrections of errors that are merely clerical in
30.22 	nature or changes that extend homestead treatment to property
30.23 	are permitted after adjournment until the tax extension date for
30.24 	that assessment year.  The changes must be fully documented and
30.25 	maintained in the assessor's office and must be available for
30.26 	review by any person.  A copy of the changes made during this
30.27 	period in those cities or towns that hold a local board of
30.28 	review must be sent to the county board no later than December
30.29 	31 of the assessment year.
30.30 	(b) The board shall determine whether the taxable property
30.31 	in the town or city has been properly placed on the list and
30.32 	properly valued by the assessor.  If real or personal property
30.33 	has been omitted, the board shall place it on the list with its
30.34 	market value, and correct the assessment so that each tract or
30.35 	lot of real property, and each article, parcel, or class of
30.36 	personal property, is entered on the assessment list at its
31.1 	market value.  No assessment of the property of any person may
31.2 	be raised unless the person has been duly notified of the intent
31.3 	of the board to do so.  On application of any person feeling
31.4 	aggrieved, the board shall review the assessment or
31.5 	classification, or both, and correct it as appears just.  The
31.6 	board may not make an individual market value adjustment or
31.7 	classification change that would benefit the property in cases
31.8 	where if the owner or other person having control over the
31.9 	property will not permit the assessor has refused the assessor
31.10 	access to inspect the property and the interior of any buildings
31.11 	or structures as provided in section 273.20.
31.12 	(c) A local board may reduce assessments upon petition of
31.13 	the taxpayer but the total reductions must not reduce the
31.14 	aggregate assessment made by the county assessor by more than
31.15 	one percent.  If the total reductions would lower the aggregate
31.16 	assessments made by the county assessor by more than one
31.17 	percent, none of the adjustments may be made.  The assessor
31.18 	shall correct any clerical errors or double assessments
31.19 	discovered by the board without regard to the one percent
31.20 	limitation.
31.21 	(d) A local board does not have authority to grant an
31.22 	exemption or to order property removed from the tax rolls.
31.23 	(e) A majority of the members may act at the meeting, and
31.24 	adjourn from day to day until they finish hearing the cases
31.25 	presented.  The assessor shall attend, with the assessment books
31.26 	and papers, and take part in the proceedings, but must not
31.27 	vote.  The county assessor, or an assistant delegated by the
31.28 	county assessor shall attend the meetings.  The board shall list
31.29 	separately, on a form appended to the assessment book, all
31.30 	omitted property added to the list by the board and all items of
31.31 	property increased or decreased, with the market value of each
31.32 	item of property, added or changed by the board, placed opposite
31.33 	the item.  The county assessor shall enter all changes made by
31.34 	the board in the assessment book.
31.35 	(f) Except as provided in subdivision 3, if a person fails
31.36 	to appear in person, by counsel, or by written communication
32.1 	before the board after being duly notified of the board's intent
32.2 	to raise the assessment of the property, or if a person feeling
32.3 	aggrieved by an assessment or classification fails to apply for
32.4 	a review of the assessment or classification, the person may not
32.5 	appear before the county board of appeal and equalization for a
32.6 	review of the assessment or classification.  This paragraph does
32.7 	not apply if an assessment was made after the local board
32.8 	meeting, as provided in section 273.01, or if the person can
32.9 	establish not having received notice of market value at least
32.10 	five days before the local board meeting.
32.11 	(g) The local board must complete its work and adjourn
32.12 	within 20 days from the time of convening stated in the notice
32.13 	of the clerk, unless a longer period is approved by the
32.14 	commissioner of revenue.  No action taken after that date is
32.15 	valid.  All complaints about an assessment or classification
32.16 	made after the meeting of the board must be heard and determined
32.17 	by the county board of equalization.  A nonresident may, at any
32.18 	time, before the meeting of the board file written objections to
32.19 	an assessment or classification with the county assessor.  The
32.20 	objections must be presented to the board at its meeting by the
32.21 	county assessor for its consideration.
32.22 	
EFFECTIVE DATE. This section is effective for the 2006
32.23 	assessment and thereafter.

32.24 	Sec. 19. Minnesota Statutes 2004, section 275.025,
32.25 	subdivision 3, is amended to read:
32.26 		Subd. 3.Seasonal residential recreational tax capacity.
 32.27 	For the purposes of this section, "seasonal residential
32.28 	recreational tax capacity" means the tax capacity of tier III of
32.29 	class 1c under section 273.13, subdivision 22, and all class
32.30 	4c(1) property under section 273.13, subdivision 25, except that
32.31 	the first $76,000 of market value of each noncommercial class
32.32 	4c(1) property has a tax capacity for this purpose equal to 40
32.33 	percent of its tax capacity under section 273.13.
32.34 	
EFFECTIVE DATE. This section is effective for taxes
32.35 	levied in 2005, payable in 2006, and thereafter.

32.36 	Sec. 20. Minnesota Statutes 2004, section 275.025,
33.1 	subdivision 4, is amended to read:
33.2 		Subd. 4.Apportionment and levy of state general tax.
 33.3 	Ninety-five percent of the state general tax must be distributed
33.4 	among the counties levied by applying a uniform rate to each
33.5 	county's all commercial-industrial tax capacity and its five
33.6 	percent of the state general tax must be levied by applying a
33.7 	uniform rate to all seasonal residential recreational tax
33.8 	capacity. Within each county, the tax must be levied by
33.9 	applying a uniform rate against commercial-industrial tax
33.10 	capacity and seasonal residential recreational tax capacity.On
33.11 	or before October 1 each year, the commissioner of revenue shall
33.12 	certify a the preliminary state general levy rate rates to each
33.13 	county auditor that must be used to prepare the notices of
33.14 	proposed property taxes for taxes payable in the following
33.15 	year.  By January 1 of each year, the commissioner shall certify
33.16 	the final state general levy rate to each county auditor that
33.17 	shall be used in spreading taxes.
33.18 	
EFFECTIVE DATE. This section is effective for taxes
33.19 	payable in 2006 and thereafter.

33.20 	Sec. 21. Minnesota Statutes 2004, section 275.065,
33.21 	subdivision 1a, is amended to read:
33.22 		Subd. 1a.Overlapping jurisdictions.  In the case of a
33.23 	taxing authority lying in two or more counties, the home county
33.24 	auditor shall certify the proposed levy and the proposed local
33.25 	tax rate to the other county auditor by September 20 October 5.
33.26 	The home county auditor must estimate the levy or rate in
33.27 	preparing the notices required in subdivision 3, if the other
33.28 	county has not certified the appropriate information.  If
33.29 	requested by the home county auditor, the other county auditor
33.30 	must furnish an estimate to the home county auditor.
33.31 	
EFFECTIVE DATE. This section is effective the day
33.32 	following final enactment.

33.33 	Sec. 22. Minnesota Statutes 2004, section 275.065,
33.34 	subdivision 3, is amended to read:
33.35 		Subd. 3.Notice of proposed property taxes.  (a) The
33.36 	county auditor shall prepare and the county treasurer shall
34.1 	deliver after November 10 and on or before November 24 each
34.2 	year, by first class mail to each taxpayer at the address listed
34.3 	on the county's current year's assessment roll, a notice of
34.4 	proposed property taxes.
34.5 	(b) The commissioner of revenue shall prescribe the form of
34.6 	the notice.
34.7 	(c) The notice must inform taxpayers that it contains the
34.8 	amount of property taxes each taxing authority proposes to
34.9 	collect for taxes payable the following year.  In the case of a
34.10 	town, or in the case of the state general tax, the final tax
34.11 	amount will be its proposed tax.  In the case of taxing
34.12 	authorities required to hold a public meeting under subdivision
34.13 	6, the notice must clearly state that each taxing authority,
34.14 	including regional library districts established under section
34.15 	134.201, and including the metropolitan taxing districts as
34.16 	defined in paragraph (i), but excluding all other special taxing
34.17 	districts and towns, will hold a public meeting to receive
34.18 	public testimony on the proposed budget and proposed or final
34.19 	property tax levy, or, in case of a school district, on the
34.20 	current budget and proposed property tax levy.  It must clearly
34.21 	state the time and place of each taxing authority's meeting, a
34.22 	telephone number for the taxing authority that taxpayers may
34.23 	call if they have questions related to the notice, and an
34.24 	address where comments will be received by mail.
34.25 	(d) The notice must state for each parcel:
34.26 	(1) the market value of the property as determined under
34.27 	section 273.11, and used for computing property taxes payable in
34.28 	the following year and for taxes payable in the current year as
34.29 	each appears in the records of the county assessor on November 1
34.30 	of the current year; and, in the case of residential property,
34.31 	whether the property is classified as homestead or
34.32 	nonhomestead.  The notice must clearly inform taxpayers of the
34.33 	years to which the market values apply and that the values are
34.34 	final values;
34.35 	(2) the items listed below, shown separately by county,
34.36 	city or town, and state general tax, net of the residential and
35.1 	agricultural homestead credit under section 273.1384, voter
35.2 	approved school levy, other local school levy, and the sum of
35.3 	the special taxing districts, and as a total of all taxing
35.4 	authorities:
35.5 	(i) the actual tax for taxes payable in the current year;
35.6 	and
35.7 	(ii) the proposed tax amount.
35.8 	If the county levy under clause (2) includes an amount for
35.9 	a lake improvement district as defined under sections 103B.501
35.10 	to 103B.581, the amount attributable for that purpose must be
35.11 	separately stated from the remaining county levy amount.
35.12 	In the case of a town or the state general tax, the final
35.13 	tax shall also be its proposed tax unless the town changes its
35.14 	levy at a special town meeting under section 365.52.  If a
35.15 	school district has certified under section 126C.17, subdivision
35.16 	9, that a referendum will be held in the school district at the
35.17 	November general election, the county auditor must note next to
35.18 	the school district's proposed amount that a referendum is
35.19 	pending and that, if approved by the voters, the tax amount may
35.20 	be higher than shown on the notice.  In the case of the city of
35.21 	Minneapolis, the levy for the Minneapolis Library Board and the
35.22 	levy for Minneapolis Park and Recreation shall be listed
35.23 	separately from the remaining amount of the city's levy.  In the
35.24 	case of the city of St. Paul, the levy for the St. Paul Library
35.25 	Agency must be listed separately from the remaining amount of
35.26 	the city's levy. In the case of Ramsey County, any amount
35.27 	levied under section 134.07 may be listed separately from the
35.28 	remaining amount of the county's levy.In the case of a parcel
35.29 	where tax increment or the fiscal disparities areawide tax under
35.30 	chapter 276A or 473F applies, the proposed tax levy on the
35.31 	captured value or the proposed tax levy on the tax capacity
35.32 	subject to the areawide tax must each be stated separately and
35.33 	not included in the sum of the special taxing districts; and
35.34 	(3) the increase or decrease between the total taxes
35.35 	payable in the current year and the total proposed taxes,
35.36 	expressed as a percentage.
36.1 	For purposes of this section, the amount of the tax on
36.2 	homesteads qualifying under the senior citizens' property tax
36.3 	deferral program under chapter 290B is the total amount of
36.4 	property tax before subtraction of the deferred property tax
36.5 	amount.
36.6 	(e) The notice must clearly state that the proposed or
36.7 	final taxes do not include the following:
36.8 	(1) special assessments;
36.9 	(2) levies approved by the voters after the date the
36.10 	proposed taxes are certified, including bond referenda and
36.11 	school district levy referenda;
36.12 	(3) a levy limit increase approved by the voters by the
36.13 	first Tuesday after the first Monday in November of the levy
36.14 	year as provided under section 275.73;
36.15 	(4) amounts necessary to pay cleanup or other costs due to
36.16 	a natural disaster occurring after the date the proposed taxes
36.17 	are certified;
36.18 	(5) amounts necessary to pay tort judgments against the
36.19 	taxing authority that become final after the date the proposed
36.20 	taxes are certified; and
36.21 	(6) the contamination tax imposed on properties which
36.22 	received market value reductions for contamination.
36.23 	(f) Except as provided in subdivision 7, failure of the
36.24 	county auditor to prepare or the county treasurer to deliver the
36.25 	notice as required in this section does not invalidate the
36.26 	proposed or final tax levy or the taxes payable pursuant to the
36.27 	tax levy.
36.28 	(g) If the notice the taxpayer receives under this section
36.29 	lists the property as nonhomestead, and satisfactory
36.30 	documentation is provided to the county assessor by the
36.31 	applicable deadline, and the property qualifies for the
36.32 	homestead classification in that assessment year, the assessor
36.33 	shall reclassify the property to homestead for taxes payable in
36.34 	the following year.
36.35 	(h) In the case of class 4 residential property used as a
36.36 	residence for lease or rental periods of 30 days or more, the
37.1 	taxpayer must either:
37.2 	(1) mail or deliver a copy of the notice of proposed
37.3 	property taxes to each tenant, renter, or lessee; or
37.4 	(2) post a copy of the notice in a conspicuous place on the
37.5 	premises of the property.
37.6 	The notice must be mailed or posted by the taxpayer by
37.7 	November 27 or within three days of receipt of the notice,
37.8 	whichever is later.  A taxpayer may notify the county treasurer
37.9 	of the address of the taxpayer, agent, caretaker, or manager of
37.10 	the premises to which the notice must be mailed in order to
37.11 	fulfill the requirements of this paragraph.
37.12 	(i) For purposes of this subdivision, subdivisions 5a and
37.13 	6, "metropolitan special taxing districts" means the following
37.14 	taxing districts in the seven-county metropolitan area that levy
37.15 	a property tax for any of the specified purposes listed below:
37.16 	(1) Metropolitan Council under section 473.132, 473.167,
37.17 	473.249, 473.325, 473.446, 473.521, 473.547, or 473.834;
37.18 	(2) Metropolitan Airports Commission under section 473.667,
37.19 	473.671, or 473.672; and
37.20 	(3) Metropolitan Mosquito Control Commission under section
37.21 	473.711.
37.22 	For purposes of this section, any levies made by the
37.23 	regional rail authorities in the county of Anoka, Carver,
37.24 	Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
37.25 	398A shall be included with the appropriate county's levy and
37.26 	shall be discussed at that county's public hearing.
37.27 	(j) The governing body of a county, city, or school
37.28 	district may, with the consent of the county board, include
37.29 	supplemental information with the statement of proposed property
37.30 	taxes about the impact of state aid increases or decreases on
37.31 	property tax increases or decreases and on the level of services
37.32 	provided in the affected jurisdiction.  This supplemental
37.33 	information may include information for the following year, the
37.34 	current year, and for as many consecutive preceding years as
37.35 	deemed appropriate by the governing body of the county, city, or
37.36 	school district.  It may include only information regarding:
38.1 	(1) the impact of inflation as measured by the implicit
38.2 	price deflator for state and local government purchases;
38.3 	(2) population growth and decline;
38.4 	(3) state or federal government action; and 
38.5 	(4) other financial factors that affect the level of
38.6 	property taxation and local services that the governing body of
38.7 	the county, city, or school district may deem appropriate to
38.8 	include.
38.9 	The information may be presented using tables, written
38.10 	narrative, and graphic representations and may contain
38.11 	instruction toward further sources of information or opportunity
38.12 	for comment.
38.13 	
EFFECTIVE DATE. This section is effective for notices for
38.14 	property taxes levied in 2005, payable in 2006, and thereafter.

38.15 	Sec. 23. Minnesota Statutes 2004, section 275.065, is
38.16 	amended by adding a subdivision to read:
38.17 		Subd. 9.Aitkin county and school district
38.18 	hearing. Notwithstanding any other law, Aitkin County and
38.19 	Independent School District No. 1, and the city of Aitkin, or
38.20 	any two of them, may hold their initial public hearing jointly.
38.21 	The hearing must be held on the second Tuesday of December each
38.22 	year.  The advertisement required in subdivision 5a may be a
38.23 	joint advertisement.  The hearing is otherwise subject to the
38.24 	requirements of this section.
38.25 	
EFFECTIVE DATE. This section is effective for hearings
38.26 	conducted in 2005 and subsequent years.

38.27 	Sec. 24. Minnesota Statutes 2004, section 275.065, is
38.28 	amended by adding a subdivision to read:
38.29 		Subd. 10.Nobles county; joint initial public
38.30 	hearing. Notwithstanding any other law, Nobles County, the city
38.31 	of Worthington, and Independent School District No. 518,
38.32 	Worthington, or any two of them, may hold their initial public
38.33 	hearing jointly.  The hearing must be held on the second Tuesday
38.34 	of December each year.  The advertisement required in
38.35 	subdivision 5a may be a joint advertisement.  The hearing is
38.36 	otherwise subject to the requirements of this section.
39.1 	
EFFECTIVE DATE. This section is effective for hearings
39.2 	conducted in 2005 and subsequent years.

39.3 	Sec. 25. Minnesota Statutes 2004, section 275.70,
39.4 	subdivision 5, as amended by Laws 2005, chapter 152, article 1,
39.5 	section 3, is amended to read:
39.6 		Subd. 5.Special levies. "Special levies" means those
39.7 	portions of ad valorem taxes levied by a local governmental unit
39.8 	for the following purposes or in the following manner:
39.9 	(1) to pay the costs of the principal and interest on
39.10 	bonded indebtedness or to reimburse for the amount of liquor
39.11 	store revenues used to pay the principal and interest due on
39.12 	municipal liquor store bonds in the year preceding the year for
39.13 	which the levy limit is calculated;
39.14 	(2) to pay the costs of principal and interest on
39.15 	certificates of indebtedness issued for any corporate purpose
39.16 	except for the following:
39.17 	(i) tax anticipation or aid anticipation certificates of
39.18 	indebtedness;
39.19 	(ii) certificates of indebtedness issued under sections
39.20 	298.28 and 298.282;
39.21 	(iii) certificates of indebtedness used to fund current
39.22 	expenses or to pay the costs of extraordinary expenditures that
39.23 	result from a public emergency; or
39.24 	(iv) certificates of indebtedness used to fund an
39.25 	insufficiency in tax receipts or an insufficiency in other
39.26 	revenue sources;
39.27 	(3) to provide for the bonded indebtedness portion of
39.28 	payments made to another political subdivision of the state of
39.29 	Minnesota;
39.30 	(4) to fund payments made to the Minnesota State Armory
39.31 	Building Commission under section 193.145, subdivision 2, to
39.32 	retire the principal and interest on armory construction bonds;
39.33 	(5) property taxes approved by voters which are levied
39.34 	against the referendum market value as provided under section
39.35 	275.61;
39.36 	(6) to fund matching requirements needed to qualify for
40.1 	federal or state grants or programs to the extent that either
40.2 	(i) the matching requirement exceeds the matching requirement in
40.3 	calendar year 2001, or (ii) it is a new matching requirement
40.4 	that did not exist prior to 2002;
40.5 	(7) to pay the expenses reasonably and necessarily incurred
40.6 	in preparing for or repairing the effects of natural disaster
40.7 	including the occurrence or threat of widespread or severe
40.8 	damage, injury, or loss of life or property resulting from
40.9 	natural causes, in accordance with standards formulated by the
40.10 	Emergency Services Division of the state Department of Public
40.11 	Safety, as allowed by the commissioner of revenue under section
40.12 	275.74, subdivision 2;
40.13 	(8) pay amounts required to correct an error in the levy
40.14 	certified to the county auditor by a city or county in a levy
40.15 	year, but only to the extent that when added to the preceding
40.16 	year's levy it is not in excess of an applicable statutory,
40.17 	special law or charter limitation, or the limitation imposed on
40.18 	the governmental subdivision by sections 275.70 to 275.74 in the
40.19 	preceding levy year;
40.20 	(9) to pay an abatement under section 469.1815;
40.21 	(10) to pay any costs attributable to increases in the
40.22 	employer contribution rates under chapter 353 that are effective
40.23 	after June 30, 2001;
40.24 	(11) to pay the operating or maintenance costs of a county
40.25 	jail as authorized in section 641.01 or 641.262, or of a
40.26 	correctional facility as defined in section 241.021, subdivision
40.27 	1, paragraph (f), to the extent that the county can demonstrate
40.28 	to the commissioner of revenue that the amount has been included
40.29 	in the county budget as a direct result of a rule, minimum
40.30 	requirement, minimum standard, or directive of the Department of
40.31 	Corrections, or to pay the operating or maintenance costs of a
40.32 	regional jail as authorized in section 641.262.  For purposes of
40.33 	this clause, a district court order is not a rule, minimum
40.34 	requirement, minimum standard, or directive of the Department of
40.35 	Corrections.  If the county utilizes this special levy, except
40.36 	to pay operating or maintenance costs of a new regional jail
41.1 	facility under sections 641.262 to 641.264 which will not
41.2 	replace an existing jail facility, any amount levied by the
41.3 	county in the previous levy year for the purposes specified
41.4 	under this clause and included in the county's previous year's
41.5 	levy limitation computed under section 275.71, shall be deducted
41.6 	from the levy limit base under section 275.71, subdivision 2,
41.7 	when determining the county's current year levy limitation.  The
41.8 	county shall provide the necessary information to the
41.9 	commissioner of revenue for making this determination;
41.10 	(12) to pay for operation of a lake improvement district,
41.11 	as authorized under section 103B.555.  If the county utilizes
41.12 	this special levy, any amount levied by the county in the
41.13 	previous levy year for the purposes specified under this clause
41.14 	and included in the county's previous year's levy limitation
41.15 	computed under section 275.71 shall be deducted from the levy
41.16 	limit base under section 275.71, subdivision 2, when determining
41.17 	the county's current year levy limitation.  The county shall
41.18 	provide the necessary information to the commissioner of revenue
41.19 	for making this determination;
41.20 	(13) to repay a state or federal loan used to fund the
41.21 	direct or indirect required spending by the local government due
41.22 	to a state or federal transportation project or other state or
41.23 	federal capital project.  This authority may only be used if the
41.24 	project is not a local government initiative;
41.25 	(14) to pay for court administration costs as required
41.26 	under section 273.1398, subdivision 4b, less the (i) county's
41.27 	share of transferred fines and fees collected by the district
41.28 	courts in the county for calendar year 2001 and (ii) the aid
41.29 	amount certified to be paid to the county in 2004 under section
41.30 	273.1398, subdivision 4c; however, for taxes levied to pay for
41.31 	these costs in the year in which the court financing is
41.32 	transferred to the state, the amount under this clause is
41.33 	limited to the amount of aid the county is certified to receive
41.34 	under section 273.1398, subdivision 4a;
41.35 	(15) to fund a police or firefighters relief association as
41.36 	required under section 69.77 to the extent that the required
42.1 	amount exceeds the amount levied for this purpose in 2001; and 
42.2 	(16) for purposes of a storm sewer improvement district,
42.3 	pursuant to under section 444.20; and 
42.4 	(17) to pay for the maintenance and support of a city or
42.5 	county society for the prevention of cruelty to animals under
42.6 	section 343.11.  If the city or county uses this special levy,
42.7 	any amount levied by the city or county in the previous levy
42.8 	year for the purposes specified in this clause and included in
42.9 	the city's or county's previous year's levy limit computed under
42.10 	section 275.71, must be deducted from the levy limit base under
42.11 	section 275.71, subdivision 2, in determining the city's or
42.12 	county's current year levy limit.
42.13 	
EFFECTIVE DATE. This section is effective for taxes
42.14 	levied in 2005, payable in 2006, and thereafter.

42.15 	Sec. 26. Minnesota Statutes 2004, section 276.04,
42.16 	subdivision 2, as amended by Laws 2005, chapter 10, article 1,
42.17 	section 60, is amended to read:
42.18 		Subd. 2.Contents of tax statements. (a) The treasurer
42.19 	shall provide for the printing of the tax statements.  The
42.20 	commissioner of revenue shall prescribe the form of the property
42.21 	tax statement and its contents.  The statement must contain a
42.22 	tabulated statement of the dollar amount due to each taxing
42.23 	authority and the amount of the state tax from the parcel of
42.24 	real property for which a particular tax statement is prepared.
42.25 	The dollar amounts attributable to the county, the state tax,
42.26 	the voter approved school tax, the other local school tax, the
42.27 	township or municipality, and the total of the metropolitan
42.28 	special taxing districts as defined in section 275.065,
42.29 	subdivision 3, paragraph (i), must be separately stated.  The
42.30 	amounts due all other special taxing districts, if any, may be
42.31 	aggregated except that any levies made by the regional rail
42.32 	authorities in the county of Anoka, Carver, Dakota, Hennepin,
42.33 	Ramsey, Scott, or Washington under chapter 398A shall be listed
42.34 	on a separate line directly under the appropriate county's
42.35 	levy.  If the county levy under this paragraph includes an
42.36 	amount for a lake improvement district as defined under sections
43.1 	103B.501 to 103B.581, the amount attributable for that purpose
43.2 	must be separately stated from the remaining county levy
43.3 	amount. In the case of Ramsey County, if the county levy under
43.4 	this paragraph includes an amount for public library service
43.5 	under section 134.07, the amount attributable for that purpose
43.6 	may be separated from the remaining county levy amount.The
43.7 	amount of the tax on homesteads qualifying under the senior
43.8 	citizens' property tax deferral program under chapter 290B is
43.9 	the total amount of property tax before subtraction of the
43.10 	deferred property tax amount.  The amount of the tax on
43.11 	contamination value imposed under sections 270.91 to 270.98, if
43.12 	any, must also be separately stated.  The dollar amounts,
43.13 	including the dollar amount of any special assessments, may be
43.14 	rounded to the nearest even whole dollar.  For purposes of this
43.15 	section whole odd-numbered dollars may be adjusted to the next
43.16 	higher even-numbered dollar.  The amount of market value
43.17 	excluded under section 273.11, subdivision 16, if any, must also
43.18 	be listed on the tax statement.
43.19 	(b) The property tax statements for manufactured homes and
43.20 	sectional structures taxed as personal property shall contain
43.21 	the same information that is required on the tax statements for
43.22 	real property.
43.23 	(c) Real and personal property tax statements must contain
43.24 	the following information in the order given in this paragraph.
43.25 	The information must contain the current year tax information in
43.26 	the right column with the corresponding information for the
43.27 	previous year in a column on the left:
43.28 	(1) the property's estimated market value under section
43.29 	273.11, subdivision 1;
43.30 	(2) the property's taxable market value after reductions
43.31 	under section 273.11, subdivisions 1a and 16;
43.32 	(3) the property's gross tax, calculated by adding the
43.33 	property's total property tax to the sum of the aids enumerated
43.34 	in clause (4);
43.35 	(4) a total of the following aids:
43.36 	(i) education aids payable under chapters 122A, 123A, 123B,
44.1 	124D, 125A, 126C, and 127A;
44.2 	(ii) local government aids for cities, towns, and counties
44.3 	under chapter 477A sections 477A.011 to 477A.04; and
44.4 	(iii) disparity reduction aid under section 273.1398;
44.5 	(5) for homestead residential and agricultural properties,
44.6 	the credits under section 273.1384;
44.7 	(6) any credits received under sections 273.119; 273.123;
44.8 	273.135; 273.1391; 273.1398, subdivision 4; 469.171; and
44.9 	473H.10, except that the amount of credit received under section
44.10 	273.135 must be separately stated and identified as "taconite
44.11 	tax relief"; and
44.12 	(7) the net tax payable in the manner required in paragraph
44.13 	(a).
44.14 	(d) If the county uses envelopes for mailing property tax
44.15 	statements and if the county agrees, a taxing district may
44.16 	include a notice with the property tax statement notifying
44.17 	taxpayers when the taxing district will begin its budget
44.18 	deliberations for the current year, and encouraging taxpayers to
44.19 	attend the hearings.  If the county allows notices to be
44.20 	included in the envelope containing the property tax statement,
44.21 	and if more than one taxing district relative to a given
44.22 	property decides to include a notice with the tax statement, the
44.23 	county treasurer or auditor must coordinate the process and may
44.24 	combine the information on a single announcement.
44.25 	The commissioner of revenue shall certify to the county
44.26 	auditor the actual or estimated aids enumerated in paragraph
44.27 	(c), clause (4), that local governments will receive in the
44.28 	following year.  The commissioner must certify this amount by
44.29 	January 1 of each year.
44.30 	
EFFECTIVE DATE. This section is effective for property
44.31 	tax statements for taxes payable in 2006 and thereafter.

44.32 	Sec. 27. Minnesota Statutes 2004, section 298.24,
44.33 	subdivision 1, as amended by Laws 2005, chapter 151, article 8,
44.34 	section 18, is amended to read:
44.35 	Subdivision 1.  (a) For concentrate produced in 2001, 2002,
44.36 	and 2003, there is imposed upon taconite and iron sulphides, and
45.1 	upon the mining and quarrying thereof, and upon the production
45.2 	of iron ore concentrate therefrom, and upon the concentrate so
45.3 	produced, a tax of $2.103 per gross ton of merchantable iron ore
45.4 	concentrate produced therefrom. For concentrates produced in
45.5 	2005, the tax rate is the same rate imposed for concentrates
45.6 	produced in 2004.
45.7 	(b) For concentrates produced in 2004 2006 and subsequent
45.8 	years, the tax rate shall be equal to the preceding year's tax
45.9 	rate plus an amount equal to the preceding year's tax rate
45.10 	multiplied by the percentage increase in the implicit price
45.11 	deflator from the fourth quarter of the second preceding year to
45.12 	the fourth quarter of the preceding year.  "Implicit price
45.13 	deflator" means the implicit price deflator for the gross
45.14 	domestic product prepared by the Bureau of Economic Analysis of
45.15 	the United States Department of Commerce.
45.16 	(c) On concentrates produced in 1997 and thereafter, an
45.17 	additional tax is imposed equal to three cents per gross ton of
45.18 	merchantable iron ore concentrate for each one percent that the
45.19 	iron content of the product exceeds 72 percent, when dried at
45.20 	212 degrees Fahrenheit.
45.21 	(d) The tax shall be imposed on the average of the
45.22 	production for the current year and the previous two years.  The
45.23 	rate of the tax imposed will be the current year's tax rate.
45.24 	This clause shall not apply in the case of the closing of a
45.25 	taconite facility if the property taxes on the facility would be
45.26 	higher if this clause and section 298.25 were not applicable.
45.27 	(e) If the tax or any part of the tax imposed by this
45.28 	subdivision is held to be unconstitutional, a tax of $2.103 per
45.29 	gross ton of merchantable iron ore concentrate produced shall be
45.30 	imposed.
45.31 	(f) Consistent with the intent of this subdivision to
45.32 	impose a tax based upon the weight of merchantable iron ore
45.33 	concentrate, the commissioner of revenue may indirectly
45.34 	determine the weight of merchantable iron ore concentrate
45.35 	included in fluxed pellets by subtracting the weight of the
45.36 	limestone, dolomite, or olivine derivatives or other basic flux
46.1 	additives included in the pellets from the weight of the
46.2 	pellets.  For purposes of this paragraph, "fluxed pellets" are
46.3 	pellets produced in a process in which limestone, dolomite,
46.4 	olivine, or other basic flux additives are combined with
46.5 	merchantable iron ore concentrate.  No subtraction from the
46.6 	weight of the pellets shall be allowed for binders, mineral and
46.7 	chemical additives other than basic flux additives, or moisture.
46.8 	(g)(1) Notwithstanding any other provision of this
46.9 	subdivision, for the first two years of a plant's commercial
46.10 	production of direct reduced ore, no tax is imposed under this
46.11 	section.  As used in this paragraph, "commercial production" is
46.12 	production of more than 50,000 tons of direct reduced ore in the
46.13 	current year or in any prior year, "noncommercial production" is
46.14 	production of 50,000 tons or less of direct reduced ore in any
46.15 	year, and "direct reduced ore" is ore that results in a product
46.16 	that has an iron content of at least 75 percent.  For the third
46.17 	year of a plant's commercial production of direct reduced ore,
46.18 	the rate to be applied to direct reduced ore is 25 percent of
46.19 	the rate otherwise determined under this subdivision.  For the
46.20 	fourth commercial production year, the rate is 50 percent of the
46.21 	rate otherwise determined under this subdivision; for the fifth
46.22 	commercial production year, the rate is 75 percent of the rate
46.23 	otherwise determined under this subdivision; and for all
46.24 	subsequent commercial production years, the full rate is imposed.
46.25 	(2) Subject to clause (1), production of direct reduced ore
46.26 	in this state is subject to the tax imposed by this section, but
46.27 	if that production is not produced by a producer of taconite or
46.28 	iron sulfides, the production of taconite or iron sulfides
46.29 	consumed in the production of direct reduced iron in this state
46.30 	is not subject to the tax imposed by this section on taconite or
46.31 	iron sulfides.
46.32 	(3) Notwithstanding any other provision of this
46.33 	subdivision, no tax is imposed on direct reduced ore under this
46.34 	section during the facility's noncommercial production of direct
46.35 	reduced ore.  The taconite or iron sulphides consumed in the
46.36 	noncommercial production of direct reduced ore is subject to the
47.1 	tax imposed by this section on taconite and iron sulphides.
47.2 	Three-year average production of direct reduced ore does not
47.3 	include production of direct reduced ore in any noncommercial
47.4 	year.  Three-year average production for a direct reduced ore
47.5 	facility that has noncommercial production is the average of the
47.6 	commercial production of direct reduced ore for the current year
47.7 	and the previous two commercial years.

47.8 	Sec. 28. Minnesota Statutes 2004, section 469.033,
47.9 	subdivision 6, is amended to read:
47.10 		Subd. 6.Operation area as taxing district, special tax.
 47.11 	All of the territory included within the area of operation of
47.12 	any authority shall constitute a taxing district for the purpose
47.13 	of levying and collecting special benefit taxes as provided in
47.14 	this subdivision.  All of the taxable property, both real and
47.15 	personal, within that taxing district shall be deemed to be
47.16 	benefited by projects to the extent of the special taxes levied
47.17 	under this subdivision.  Subject to the consent by resolution of
47.18 	the governing body of the city in and for which it was created,
47.19 	an authority may levy a tax upon all taxable property within
47.20 	that taxing district.  The tax shall be extended, spread, and
47.21 	included with and as a part of the general taxes for state,
47.22 	county, and municipal purposes by the county auditor, to be
47.23 	collected and enforced therewith, together with the penalty,
47.24 	interest, and costs.  As the tax, including any penalties,
47.25 	interest, and costs, is collected by the county treasurer it
47.26 	shall be accumulated and kept in a separate fund to be known as
47.27 	the "housing and redevelopment project fund."  The money in the
47.28 	fund shall be turned over to the authority at the same time and
47.29 	in the same manner that the tax collections for the city are
47.30 	turned over to the city, and shall be expended only for the
47.31 	purposes of sections 469.001 to 469.047.  It shall be paid out
47.32 	upon vouchers signed by the chair of the authority or an
47.33 	authorized representative.  The amount of the levy shall be an
47.34 	amount approved by the governing body of the city, but shall not
47.35 	exceed 0.0144 percent of taxable market value for the current
47.36 	levy year, notwithstanding section 273.032.  The authority shall
48.1 	each year formulate and file a budget in accordance with the
48.2 	budget procedure of the city in the same manner as required of
48.3 	executive departments of the city or, if no budgets are required
48.4 	to be filed, by August 1.  The amount of the tax levy for the
48.5 	following year shall be based on that budget.
48.6 	
EFFECTIVE DATE. This section is effective for taxes
48.7 	payable in 2006 and thereafter.

48.8 	Sec. 29. Minnesota Statutes 2004, section 473F.02,
48.9 	subdivision 2, is amended to read:
48.10 		Subd. 2.Area.  "Area" means the territory included
48.11 	within the boundaries of Anoka, Carver, Dakota excluding the
48.12 	city of Northfield, Hennepin, Ramsey, Scott excluding the city
48.13 	of New Prague, and Washington Counties, excluding lands
48.14 	constituting a major or an intermediate airport as defined under
48.15 	section 473.625.
48.16 	
EFFECTIVE DATE. This section is effective for taxes
48.17 	payable in 2006 and subsequent years.

48.18 	Sec. 30. Minnesota Statutes 2004, section 473F.08,
48.19 	subdivision 3a, is amended to read:
48.20 		Subd. 3a.Bloomington computation.  Beginning in 1987 and
48.21 	each subsequent year through 1998, the city of Bloomington shall
48.22 	determine the interest payments for that year for the bonds
48.23 	which have been sold for the highway improvements pursuant to
48.24 	Laws 1986, chapter 391, section 2, paragraph (g).  Effective for
48.25 	property taxes payable in 1988 through property taxes payable in
48.26 	1999, after the Hennepin County auditor has computed the
48.27 	areawide portion of the levy for the city of Bloomington
48.28 	pursuant to subdivision 3, clause (a), the auditor shall
48.29 	annually add a dollar amount to the city of Bloomington's
48.30 	areawide portion of the levy equal to the amount which has been
48.31 	certified to the auditor by the city of Bloomington for the
48.32 	interest payments for that year for the bonds which were sold
48.33 	for highway improvements.  The total areawide portion of the
48.34 	levy for the city of Bloomington including the additional amount
48.35 	for interest repayment certified pursuant to this subdivision
48.36 	shall be certified by the Hennepin County auditor to the
49.1 	administrative auditor pursuant to subdivision 5.  The Hennepin
49.2 	County auditor shall distribute to the city of Bloomington the
49.3 	additional areawide portion of the levy computed pursuant to
49.4 	this subdivision at the same time that payments are made to the
49.5 	other counties pursuant to subdivision 7a.  For property taxes
49.6 	payable from the year 2006 2009 through 2015 2018, the Hennepin
49.7 	County auditor shall adjust Bloomington's contribution to the
49.8 	areawide gross tax capacity upward each year by a value equal to
49.9 	ten percent of the total additional areawide levy distributed to
49.10 	Bloomington under this subdivision from 1988 to 1999, divided by
49.11 	the areawide tax rate for taxes payable in the previous year.
49.12 	
EFFECTIVE DATE. This section is effective the day
49.13 	following final enactment.

49.14 	Sec. 31. Minnesota Statutes 2004, section 477A.11,
49.15 	subdivision 4, is amended to read:
49.16 		Subd. 4.Other natural resources land.  "Other natural
49.17 	resources land" means:
49.18 	(1) any other land presently owned in fee title by the
49.19 	state and administered by the commissioner, or any tax-forfeited
49.20 	land, other than platted lots within a city or those lands
49.21 	described under subdivision 3, clause (2), which is owned by the
49.22 	state and administered by the commissioner or by the county in
49.23 	which it is located; and 
49.24 	(2) land leased by the state from the United States of
49.25 	America through the United States Secretary of Agriculture
49.26 	pursuant to Title III of the Bankhead Jones Farm Tenant Act,
49.27 	which land is commonly referred to as land utilization project
49.28 	land that is administered by the commissioner.
49.29 	
EFFECTIVE DATE. This section is effective for aids paid
49.30 	in calendar year 2006 and thereafter.

49.31 	Sec. 32. Minnesota Statutes 2004, section 477A.11, is
49.32 	amended by adding a subdivision to read:
49.33 		Subd. 5.Land utilization project land. "Land
49.34 	utilization project land" means land that is leased by the state
49.35 	from the United States through the United States Secretary of
49.36 	Agriculture according to Title III of the Bankhead Jones Farm
50.1 	Tenant Act and that is administered by the commissioner.
50.2 	
EFFECTIVE DATE. This section is effective for aids paid
50.3 	in calendar year 2006 and thereafter.

50.4 	Sec. 33. Minnesota Statutes 2004, section 477A.12,
50.5 	subdivision 1, is amended to read:
50.6 		Subdivision 1.Types of land; payments.  (a) As an offset
50.7 	for expenses incurred by counties and towns in support of
50.8 	natural resources lands, the following amounts are annually
50.9 	appropriated to the commissioner of natural resources from the
50.10 	general fund for transfer to the commissioner of revenue.  The
50.11 	commissioner of revenue shall pay the transferred funds to
50.12 	counties as required by sections 477A.11 to 477A.145.  The
50.13 	amounts are:
50.14 	(1) for acquired natural resources land, $3, as adjusted
50.15 	for inflation under section 477A.145, multiplied by the total
50.16 	number of acres of acquired natural resources land or, at the
50.17 	county's option three-fourths of one percent of the appraised
50.18 	value of all acquired natural resources land in the county,
50.19 	whichever is greater;
50.20 	(2) 75 cents, as adjusted for inflation under section
50.21 	477A.145, multiplied by the number of acres of
50.22 	county-administered other natural resources land; and
50.23 	(3) 75 cents, as adjusted for inflation under section
50.24 	477A.145, multiplied by the total number of acres of land
50.25 	utilization project land;
50.26 	(3) (4) 37.5 cents, as adjusted for inflation under section
50.27 	477A.145, multiplied by the number of acres of
50.28 	commissioner-administered other natural resources land located
50.29 	in each county as of July 1 of each year prior to the payment
50.30 	year.
50.31 	(b) The amount determined under paragraph (a), clause (1),
50.32 	is payable for land that is acquired from a private owner and
50.33 	owned by the Department of Transportation for the purpose of
50.34 	replacing wetland losses caused by transportation projects, but
50.35 	only if the county contains more than 500 acres of such land at
50.36 	the time the certification is made under subdivision 2.
51.1 	
EFFECTIVE DATE. This section is effective for aids paid
51.2 	in calendar year 2006 and thereafter.

51.3 	Sec. 34. Minnesota Statutes 2004, section 477A.12,
51.4 	subdivision 2, is amended to read:
51.5 		Subd. 2.Procedure.  Lands for which payments in lieu are
51.6 	made pursuant to section 97A.061, subdivision 3, and Laws 1973,
51.7 	chapter 567, shall not be eligible for payments under this
51.8 	section.  Each county auditor shall certify to the Department of
51.9 	Natural Resources during July of each year prior to the payment
51.10 	year the number of acres of county-administered other natural
51.11 	resources land within the county.  The Department of Natural
51.12 	resources may, in addition to the certification of acreage,
51.13 	require descriptive lists of land so certified.  The
51.14 	commissioner of natural resources shall determine and certify to
51.15 	the commissioner of revenue by March 1 of the payment year:
51.16 	(1) the number of acres and most recent appraised value of
51.17 	acquired natural resources land within each county;
51.18 	(2) the number of acres of commissioner-administered
51.19 	natural resources land within each county; and 
51.20 	(3) the number of acres of county-administered other
51.21 	natural resources land within each county, based on the reports
51.22 	filed by each county auditor with the commissioner of natural
51.23 	resources; and 
51.24 	(4) the number of acres of land utilization project land
51.25 	within each county.
51.26 	The commissioner of transportation shall determine and
51.27 	certify to the commissioner of revenue by March 1 of the payment
51.28 	year the number of acres of land and the appraised value of the
51.29 	land described in subdivision 1, paragraph (b), but only if it
51.30 	exceeds 500 acres.
51.31 	The commissioner of revenue shall determine the
51.32 	distributions provided for in this section using the number of
51.33 	acres and appraised values certified by the commissioner of
51.34 	natural resources and the commissioner of transportation by
51.35 	March 1 of the payment year.
51.36 	
EFFECTIVE DATE. This section is effective for aids paid
52.1 	in calendar year 2006 and thereafter.

52.2 	Sec. 35. Minnesota Statutes 2004, section 477A.14,
52.3 	subdivision 1, is amended to read:
52.4 		Subdivision 1.General distribution.  Except as provided
52.5 	in subdivision 2 or in section 97A.061, subdivision 5, 40
52.6 	percent of the total payment to the county shall be deposited in
52.7 	the county general revenue fund to be used to provide property
52.8 	tax levy reduction.  The remainder shall be distributed by the
52.9 	county in the following priority:
52.10 	(a) 37.5 cents, as adjusted for inflation under section
52.11 	477A.145, for each acre of county-administered other natural
52.12 	resources land shall be deposited in a resource development fund
52.13 	to be created within the county treasury for use in resource
52.14 	development, forest management, game and fish habitat
52.15 	improvement, and recreational development and maintenance of
52.16 	county-administered other natural resources land.  Any county
52.17 	receiving less than $5,000 annually for the resource development
52.18 	fund may elect to deposit that amount in the county general
52.19 	revenue fund;
52.20 	(b) From the funds remaining, within 30 days of receipt of
52.21 	the payment to the county, the county treasurer shall pay each
52.22 	organized township 30 cents, as adjusted for inflation under
52.23 	section 477A.145, for each acre of acquired natural resources
52.24 	land and each acre of land described in section 477A.12,
52.25 	subdivision 1, paragraph (b), and 7.5 cents, as adjusted for
52.26 	inflation under section 477A.145, for each acre of other natural
52.27 	resources land and each acre of land utilization project land 
52.28 	located within its boundaries.  Payments for natural resources
52.29 	lands not located in an organized township shall be deposited in
52.30 	the county general revenue fund.  Payments to counties and
52.31 	townships pursuant to this paragraph shall be used to provide
52.32 	property tax levy reduction, except that of the payments for
52.33 	natural resources lands not located in an organized township,
52.34 	the county may allocate the amount determined to be necessary
52.35 	for maintenance of roads in unorganized townships.  Provided
52.36 	that, if the total payment to the county pursuant to section
53.1 	477A.12 is not sufficient to fully fund the distribution
53.2 	provided for in this clause, the amount available shall be
53.3 	distributed to each township and the county general revenue fund
53.4 	on a pro rata basis; and
53.5 	(c) Any remaining funds shall be deposited in the county
53.6 	general revenue fund.  Provided that, if the distribution to the
53.7 	county general revenue fund exceeds $35,000, the excess shall be
53.8 	used to provide property tax levy reduction.
53.9 	
EFFECTIVE DATE. This section is effective for aids paid
53.10 	in calendar year 2006 and thereafter.

53.11 	Sec. 36. Laws 1994, chapter 587, article 9, section 8,
53.12 	subdivision 1, is amended to read:
53.13 		Subdivision 1.Tax levies. Notwithstanding Minnesota
53.14 	Statutes, section 471.24, each of the following cities or towns
53.15 	is authorized to levy a tax and make an appropriation not to
53.16 	exceed $15,000 $25,000 annually to the Lakeview Cemetery
53.17 	Association, operated by the town of Iron Range, for cemetery
53.18 	purposes:  the city of Coleraine, the city of Bovey, and each
53.19 	town which is a member of the cemetery association.
53.20 	
EFFECTIVE DATE. This section is effective for taxes
53.21 	levied in 2005, payable in 2006, and thereafter.

53.22 	Sec. 37. REPORTS; STANDARDIZED ASSESSMENT AND
53.23 	CLASSIFICATION STANDARDS.
 53.24 	(a) Recognizing the importance of uniform and professional
53.25 	property tax assessment and classification practices, the
53.26 	commissioner of revenue, in consultation with appropriate
53.27 	stakeholder groups, shall develop and issue two reports to the
53.28 	chairs of the house and senate tax committees.  The reports
53.29 	shall include an analysis of existing practices and provide
53.30 	recommendations, where necessary, for achieving higher quality
53.31 	and uniform assessments and consistency of property
53.32 	classifications.
53.33 	(b) The first report will be issued by February 1, 2006,
53.34 	and will address the following property types:
53.35 	(1) agricultural land including land enrolled in the green
53.36 	acres and agricultural preserve programs (both high and low
54.1 	values);
54.2 	(2) rural woodlands including timber, seasonal residential
54.3 	recreational, agricultural and residential property, and lands
54.4 	used for the production of short rotation woody crops; and 
54.5 	(3) resort property including class 1c and class 4c
54.6 	seasonal residential recreational resorts.
54.7 	(c) The second report will be issued by February 1, 2007,
54.8 	and will address the following property types:
54.9 	(1) class 4d low-income rental housing property;
54.10 	(2) lands enrolled in state or federal conservation
54.11 	programs including the Conservation Reserve Program (CRP),
54.12 	Reinvest in Minnesota (RIM) program, and Conservation Reserve
54.13 	Enhancement Program (CREP);
54.14 	(3) residential use properties including seasonal
54.15 	residential recreational and residential homestead and
54.16 	nonhomestead property; and 
54.17 	(4) commercial/industrial property.

54.18 	EFFECTIVE DATE. This section is effective the day
54.19 	following final enactment.

54.20 	Sec. 38. CODE OF CONDUCT AND ETHICS; ASSESSORS.
 54.21 	The commissioner of revenue is directed to develop a code
54.22 	of conduct and ethics for Minnesota assessors to ensure public
54.23 	confidence in property assessment.  The commissioner shall
54.24 	consult with representatives of the Minnesota Association of
54.25 	Assessing Officers, the State Board of Assessors, and any other
54.26 	groups that the commissioner deems appropriate.  The code must
54.27 	include language that promotes fairness and uniformity and
54.28 	recommends assessment practices that do not promote the
54.29 	perception of a conflict of interest.  The code must be
54.30 	completed and recommended to the Minnesota State Board of
54.31 	Assessors for adopting by January 1, 2006.  This code must be
54.32 	presented as part of the course required by Minnesota Statutes,
54.33 	section 273.0755, paragraph (c).

54.34 	EFFECTIVE DATE. This section is effective the day
54.35 	following final enactment.

54.36 	Sec. 39. DEVELOPMENT AUTHORIZED.
 55.1 	Dakota County Regional Railroad Authority may exercise the
55.2 	powers conferred by Minnesota Statutes, section 398A.04, to
55.3 	plan, establish, acquire, develop, construct, purchase, enlarge,
55.4 	extend, improve, maintain, equip, operate, regulate, and protect
55.5 	a bus rapid transit system located within the Cedar Avenue
55.6 	transitway corridor within Dakota County.  The authority may
55.7 	levy for this purpose under Minnesota Statutes, section 398A.04,
55.8 	subdivision 8, to the extent the levy authority under that
55.9 	subdivision is not required to be used for that levy year for
55.10 	railroad purposes.

55.11 	EFFECTIVE DATE. Pursuant to Minnesota Statutes, section
55.12 	645.023, subdivision 1, paragraph (a), this section is effective
55.13 	without local approval the day following final enactment.

55.14 	Sec. 40. ASSESSMENT; ASSISTED LIVING FACILITIES.
 55.15 	The Department of Revenue shall inform assessors of the
55.16 	provisions under Minnesota Statutes, section 272.02, subdivision
55.17 	7, and shall monitor changes that may occur in the assessment of
55.18 	assisted living facilities in assessment years 2005 and 2006.

55.19 	EFFECTIVE DATE. This section is effective the day
55.20 	following final enactment.

55.21 	ARTICLE 2
55.22 	PROPERTY TAX AIDS AND CREDITS

55.23 	Section 1. Minnesota Statutes 2004, section 477A.011,
55.24 	subdivision 36, as amended by Laws 2005, chapter 38, section 1,
55.25 	and Laws 2005, chapter 151, article 4, section 8, is amended to
55.26 	read:
55.27 		Subd. 36.City aid base. (a) Except as otherwise
55.28 	provided in this subdivision, "city aid base" is zero.
55.29 	(b) The city aid base for any city with a population less
55.30 	than 500 is increased by $40,000 for aids payable in calendar
55.31 	year 1995 and thereafter, and the maximum amount of total aid it
55.32 	may receive under section 477A.013, subdivision 9, paragraph
55.33 	(c), is also increased by $40,000 for aids payable in calendar
55.34 	year 1995 only, provided that:
55.35 	(i) the average total tax capacity rate for taxes payable
55.36 	in 1995 exceeds 200 percent;
56.1 	(ii) the city portion of the tax capacity rate exceeds 100
56.2 	percent; and
56.3 	(iii) its city aid base is less than $60 per capita.
56.4 	(c) The city aid base for a city is increased by $20,000 in
56.5 	1998 and thereafter and the maximum amount of total aid it may
56.6 	receive under section 477A.013, subdivision 9, paragraph (c), is
56.7 	also increased by $20,000 in calendar year 1998 only, provided
56.8 	that:
56.9 	(i) the city has a population in 1994 of 2,500 or more;
56.10 	(ii) the city is located in a county, outside of the
56.11 	metropolitan area, which contains a city of the first class;
56.12 	(iii) the city's net tax capacity used in calculating its
56.13 	1996 aid under section 477A.013 is less than $400 per capita;
56.14 	and
56.15 	(iv) at least four percent of the total net tax capacity,
56.16 	for taxes payable in 1996, of property located in the city is
56.17 	classified as railroad property.
56.18 	(d) The city aid base for a city is increased by $200,000
56.19 	in 1999 and thereafter and the maximum amount of total aid it
56.20 	may receive under section 477A.013, subdivision 9, paragraph
56.21 	(c), is also increased by $200,000 in calendar year 1999 only,
56.22 	provided that:
56.23 	(i) the city was incorporated as a statutory city after
56.24 	December 1, 1993;
56.25 	(ii) its city aid base does not exceed $5,600; and
56.26 	(iii) the city had a population in 1996 of 5,000 or more.
56.27 	(e) The city aid base for a city is increased by $450,000
56.28 	in 1999 to 2008 and the maximum amount of total aid it may
56.29 	receive under section 477A.013, subdivision 9, paragraph (c), is
56.30 	also increased by $450,000 in calendar year 1999 only, provided
56.31 	that:
56.32 	(i) the city had a population in 1996 of at least 50,000;
56.33 	(ii) its population had increased by at least 40 percent in
56.34 	the ten-year period ending in 1996; and
56.35 	(iii) its city's net tax capacity for aids payable in 1998
56.36 	is less than $700 per capita.
57.1 	(f) The city aid base for a city is increased by $150,000
57.2 	for aids payable in 2000 and thereafter, and the maximum amount
57.3 	of total aid it may receive under section 477A.013, subdivision
57.4 	9, paragraph (c), is also increased by $150,000 in calendar year
57.5 	2000 only, provided that:
57.6 	(1) the city has a population that is greater than 1,000
57.7 	and less than 2,500;
57.8 	(2) its commercial and industrial percentage for aids
57.9 	payable in 1999 is greater than 45 percent; and
57.10 	(3) the total market value of all commercial and industrial
57.11 	property in the city for assessment year 1999 is at least 15
57.12 	percent less than the total market value of all commercial and
57.13 	industrial property in the city for assessment year 1998.
57.14 	(g) The city aid base for a city is increased by $200,000
57.15 	in 2000 and thereafter, and the maximum amount of total aid it
57.16 	may receive under section 477A.013, subdivision 9, paragraph
57.17 	(c), is also increased by $200,000 in calendar year 2000 only,
57.18 	provided that:
57.19 	(1) the city had a population in 1997 of 2,500 or more;
57.20 	(2) the net tax capacity of the city used in calculating
57.21 	its 1999 aid under section 477A.013 is less than $650 per
57.22 	capita;
57.23 	(3) the pre-1940 housing percentage of the city used in
57.24 	calculating 1999 aid under section 477A.013 is greater than 12
57.25 	percent;
57.26 	(4) the 1999 local government aid of the city under section
57.27 	477A.013 is less than 20 percent of the amount that the formula
57.28 	aid of the city would have been if the need increase percentage
57.29 	was 100 percent; and
57.30 	(5) the city aid base of the city used in calculating aid
57.31 	under section 477A.013 is less than $7 per capita.
57.32 	(h) The city aid base for a city is increased by $102,000
57.33 	in 2000 and thereafter, and the maximum amount of total aid it
57.34 	may receive under section 477A.013, subdivision 9, paragraph
57.35 	(c), is also increased by $102,000 in calendar year 2000 only,
57.36 	provided that:
58.1 	(1) the city has a population in 1997 of 2,000 or more;
58.2 	(2) the net tax capacity of the city used in calculating
58.3 	its 1999 aid under section 477A.013 is less than $455 per
58.4 	capita;
58.5 	(3) the net levy of the city used in calculating 1999 aid
58.6 	under section 477A.013 is greater than $195 per capita; and
58.7 	(4) the 1999 local government aid of the city under section
58.8 	477A.013 is less than 38 percent of the amount that the formula
58.9 	aid of the city would have been if the need increase percentage
58.10 	was 100 percent.
58.11 	(i) The city aid base for a city is increased by $32,000 in
58.12 	2001 and thereafter, and the maximum amount of total aid it may
58.13 	receive under section 477A.013, subdivision 9, paragraph (c), is
58.14 	also increased by $32,000 in calendar year 2001 only, provided
58.15 	that:
58.16 	(1) the city has a population in 1998 that is greater than
58.17 	200 but less than 500;
58.18 	(2) the city's revenue need used in calculating aids
58.19 	payable in 2000 was greater than $200 per capita;
58.20 	(3) the city net tax capacity for the city used in
58.21 	calculating aids available in 2000 was equal to or less than
58.22 	$200 per capita;
58.23 	(4) the city aid base of the city used in calculating aid
58.24 	under section 477A.013 is less than $65 per capita; and
58.25 	(5) the city's formula aid for aids payable in 2000 was
58.26 	greater than zero.
58.27 	(j) The city aid base for a city is increased by $7,200 in
58.28 	2001 and thereafter, and the maximum amount of total aid it may
58.29 	receive under section 477A.013, subdivision 9, paragraph (c), is
58.30 	also increased by $7,200 in calendar year 2001 only, provided
58.31 	that:
58.32 	(1) the city had a population in 1998 that is greater than
58.33 	200 but less than 500;
58.34 	(2) the city's commercial industrial percentage used in
58.35 	calculating aids payable in 2000 was less than ten percent;
58.36 	(3) more than 25 percent of the city's population was 60
59.1 	years old or older according to the 1990 census;
59.2 	(4) the city aid base of the city used in calculating aid
59.3 	under section 477A.013 is less than $15 per capita; and
59.4 	(5) the city's formula aid for aids payable in 2000 was
59.5 	greater than zero.
59.6 	(k) The city aid base for a city is increased by $45,000 in
59.7 	2001 and thereafter and by an additional $50,000 in calendar
59.8 	years 2002 to 2011, and the maximum amount of total aid it may
59.9 	receive under section 477A.013, subdivision 9, paragraph (c), is
59.10 	also increased by $45,000 in calendar year 2001 only, and by
59.11 	$50,000 in calendar year 2002 only, provided that:
59.12 	(1) the net tax capacity of the city used in calculating
59.13 	its 2000 aid under section 477A.013 is less than $810 per
59.14 	capita;
59.15 	(2) the population of the city declined more than two
59.16 	percent between 1988 and 1998;
59.17 	(3) the net levy of the city used in calculating 2000 aid
59.18 	under section 477A.013 is greater than $240 per capita; and
59.19 	(4) the city received less than $36 per capita in aid under
59.20 	section 477A.013, subdivision 9, for aids payable in 2000.
59.21 	(l) The city aid base for a city with a population of
59.22 	10,000 or more which is located outside of the seven-county
59.23 	metropolitan area is increased in 2002 and thereafter, and the
59.24 	maximum amount of total aid it may receive under section
59.25 	477A.013, subdivision 9, paragraph (b) or (c), is also increased
59.26 	in calendar year 2002 only, by an amount equal to the lesser of:
59.27 	(1)(i) the total population of the city, as determined by
59.28 	the United States Bureau of the Census, in the 2000 census, (ii)
59.29 	minus 5,000, (iii) times 60; or
59.30 	(2) $2,500,000.
59.31 	(m) The city aid base is increased by $50,000 in 2002 and
59.32 	thereafter, and the maximum amount of total aid it may receive
59.33 	under section 477A.013, subdivision 9, paragraph (c), is also
59.34 	increased by $50,000 in calendar year 2002 only, provided that:
59.35 	(1) the city is located in the seven-county metropolitan
59.36 	area;
60.1 	(2) its population in 2000 is between 10,000 and 20,000;
60.2 	and
60.3 	(3) its commercial industrial percentage, as calculated for
60.4 	city aid payable in 2001, was greater than 25 percent.
60.5 	(n) The city aid base for a city is increased by $150,000
60.6 	in calendar years 2002 to 2011 and the maximum amount of total
60.7 	aid it may receive under section 477A.013, subdivision 9,
60.8 	paragraph (c), is also increased by $150,000 in calendar year
60.9 	2002 only, provided that:
60.10 	(1) the city had a population of at least 3,000 but no more
60.11 	than 4,000 in 1999;
60.12 	(2) its home county is located within the seven-county
60.13 	metropolitan area;
60.14 	(3) its pre-1940 housing percentage is less than 15
60.15 	percent; and
60.16 	(4) its city net tax capacity per capita for taxes payable
60.17 	in 2000 is less than $900 per capita.
60.18 	(o) The city aid base for a city is increased by $200,000
60.19 	beginning in calendar year 2003 and the maximum amount of total
60.20 	aid it may receive under section 477A.013, subdivision 9,
60.21 	paragraph (c), is also increased by $200,000 in calendar year
60.22 	2003 only, provided that the city qualified for an increase in
60.23 	homestead and agricultural credit aid under Laws 1995, chapter
60.24 	264, article 8, section 18.
60.25 	(p) The city aid base for a city is increased by $200,000
60.26 	in 2004 only and the maximum amount of total aid it may receive
60.27 	under section 477A.013, subdivision 9, is also increased by
60.28 	$200,000 in calendar year 2004 only, if the city is the site of
60.29 	a nuclear dry cask storage facility.
60.30 	(q) The city aid base for a city is increased by $10,000 in
60.31 	2004 and thereafter and the maximum total aid it may receive
60.32 	under section 477A.013, subdivision 9, is also increased by
60.33 	$10,000 in calendar year 2004 only, if the city was included in
60.34 	a federal major disaster designation issued on April 1, 1998,
60.35 	and its pre-1940 housing stock was decreased by more than 40
60.36 	percent between 1990 and 2000.
61.1 	(r) The city aid base for a city is increased by $25,000 in
61.2 	2006 only and the maximum total aid it may receive under section
61.3 	477A.013, subdivision 9, is also increased by $25,000 in
61.4 	calendar year 2006 only if the city had a population in 2003 of
61.5 	at least 1,000 and has a state park for which the city provides
61.6 	rescue services and which comprised at least 14 percent of the
61.7 	total geographic area included within the city boundaries in
61.8 	2000.
61.9 	(s) The city aid base for a city with a population less
61.10 	than 5,000 is increased in 2006 and thereafter and the minimum
61.11 	and maximum amount of total aid it may receive under this
61.12 	section is also increased in calendar year 2006 only by an
61.13 	amount equal to $6 multiplied by its population.
61.14 	
EFFECTIVE DATE. This section is effective for aids
61.15 	payable in 2006 and thereafter.

61.16 	Sec. 2. Minnesota Statutes 2004, section 477A.013,
61.17 	subdivision 8, is amended to read:
61.18 		Subd. 8.City formula aid.  In calendar year 2004 and
61.19 	subsequent years, the formula aid for a city is equal to the
61.20 	need increase percentage multiplied by the difference between
61.21 	(1) the city's revenue need multiplied by its population, and
61.22 	(2) the sum of the city's net tax capacity multiplied by the tax
61.23 	effort rate, and ;the taconite aids under sections 298.28 and
61.24 	298.282 to any city except a city directly impacted by a
61.25 	taconite mine or plant, multiplied by the following percentages:
61.26 	(i) zero percent for aids payable in 2004;
61.27 	(ii) 25 percent for aids payable in 2005;
61.28 	(iii) 50 percent for aids payable in 2006;
61.29 	(iv) 75 percent for aids payable in 2007; and
61.30 	(v) 100 percent for aids payable in 2008 and thereafter.
61.31 	For purposes of this subdivision, "a city directly impacted
61.32 	by a taconite mine or plant" means:  (1) Babbit, (2) Eveleth,
61.33 	(3) Hibbing, (4) Keewatin, (5) Mountain Iron, (6) Silver Bay, or
61.34 	(7) Virginia.
61.35 	No city may have a formula aid amount less than zero.  The need
61.36 	increase percentage must be the same for all cities.
62.1 	The applicable need increase percentage must be calculated
62.2 	by the Department of Revenue so that the total of the aid under
62.3 	subdivision 9 equals the total amount available for aid under
62.4 	section 477A.03 after the subtraction under section 477A.014,
62.5 	subdivisions 4 and 5.
62.6 	
EFFECTIVE DATE. This section is effective beginning with
62.7 	aids payable in 2006.

62.8 	Sec. 3. Minnesota Statutes 2004, section 477A.03,
62.9 	subdivision 2a, is amended to read:
62.10 		Subd. 2a.Cities.  For aids payable in 2004, the total
62.11 	aids paid under section 477A.013, subdivision 9, are limited to
62.12 	$429,000,000.  For aids payable in 2005 and thereafter, the
62.13 	total aids paid under section 477A.013, subdivision 9,
62.14 	are increased limited to $437,052,000. For aids payable in 2006
62.15 	and thereafter, the total aids paid under section 477A.013,
62.16 	subdivision 9, is limited to $485,052,000.
62.17 	
EFFECTIVE DATE. This section is effective beginning with
62.18 	aids payable in 2006.

62.19 	Sec. 4. Minnesota Statutes 2004, section 477A.03,
62.20 	subdivision 2b, as amended by Laws 2005, chapter 151, article 4,
62.21 	section 12, is amended to read:
62.22 		Subd. 2b.Counties. (a) For aids payable in calendar
62.23 	year 2005 and thereafter, the total aids paid to counties under
62.24 	section 477A.0124, subdivision 3, are limited to $100,500,000.
62.25 	Each calendar year, $500,000 shall be retained by the
62.26 	commissioner of revenue to make reimbursements to the
62.27 	commissioner of finance for payments made under section 611.27.
62.28 	For calendar year 2004, the amount shall be in addition to the
62.29 	payments authorized under section 477A.0124, subdivision 1.  For
62.30 	calendar year 2005 and subsequent years, the amount shall be
62.31 	deducted from the appropriation under this paragraph.  The
62.32 	reimbursements shall be to defray the additional costs
62.33 	associated with court-ordered counsel under section 611.27.  Any
62.34 	retained amounts not used for reimbursement in a year shall be
62.35 	included in the next distribution of county need aid that is
62.36 	certified to the county auditors for the purpose of property tax
63.1 	reduction for the next taxes payable year.
63.2 	(b) For aids payable in 2005 and 2006, the total aids under
63.3 	section 477A.0124, subdivision 4, are limited to $105,000,000.
63.4 	For aids payable in 2007 2006 and thereafter, the total aid
63.5 	under section 477A.0124, subdivision 4, is limited to
63.6 	$105,132,923.  The commissioner of finance shall bill the
63.7 	commissioner of revenue for the cost of preparation of local
63.8 	impact notes as required by section 3.987, not to exceed
63.9 	$207,000 in fiscal year 2004 and thereafter.  The commissioner
63.10 	of education shall bill the commissioner of revenue for the cost
63.11 	of preparation of local impact notes for school districts as
63.12 	required by section 3.987, not to exceed $7,000 in fiscal year
63.13 	2004 and thereafter.  The commissioner of revenue shall deduct
63.14 	the amounts billed under this paragraph from the appropriation
63.15 	under this paragraph.  The amounts deducted are appropriated to
63.16 	the commissioner of finance and the commissioner of education
63.17 	for the preparation of local impact notes.
63.18 	
EFFECTIVE DATE. This section is effective for aids
63.19 	payable in 2006 and thereafter.

63.20 	Sec. 5. 2005 AND 2006 CITY AID PAYMENTS.
 63.21 	In 2005 and 2006, market value credit reimbursements for
63.22 	each city payable under Minnesota Statutes, section 273.1384,
63.23 	are reduced by the dollar amount of the 2003 reduction in market
63.24 	value credit reimbursements for that city due to Laws 2003,
63.25 	First Special Session chapter 21, article 5, section 12.  No
63.26 	city's 2005 or 2006 market value credit reimbursements are
63.27 	reduced to less than zero under this section.  To the extent
63.28 	sufficient information is available on each payment date, the
63.29 	commissioner shall pay the annual 2005 and 2006 market value
63.30 	credit reimbursement amounts, after reduction under this
63.31 	section, to cities in equal installments on the dates specified
63.32 	in Minnesota Statutes, section 273.1384.

63.33 	EFFECTIVE DATE. This section is effective the day
63.34 	following final enactment.

63.35 	ARTICLE 3
63.36 	INCOME AND FRANCHISE TAXES

64.1 	Section 1. Minnesota Statutes 2004, section 289A.08,
64.2 	subdivision 1, is amended to read:
64.3 		Subdivision 1.Generally; individuals.  (a) A taxpayer
64.4 	must file a return for each taxable year the taxpayer is
64.5 	required to file a return under section 6012 of the Internal
64.6 	Revenue Code, except that:
64.7 	(1) an individual who is not a Minnesota resident for any
64.8 	part of the year is not required to file a Minnesota income tax
64.9 	return if the individual's gross income derived from Minnesota
64.10 	sources as determined under sections 290.081, paragraph (a), and
64.11 	290.17, is less than the filing requirements for a single
64.12 	individual who is a full year resident of Minnesota; and 
64.13 	(2) an individual who is a Minnesota resident is not
64.14 	required to file a Minnesota income tax return if the
64.15 	individual's gross income derived from Minnesota sources as
64.16 	determined under section 290.17, less the amount of the
64.17 	individual's gross income that consists of compensation paid to
64.18 	members of the armed forces of the United States or United
64.19 	Nations for active duty performed outside Minnesota, is less
64.20 	than the filing requirements for a single individual who is a
64.21 	full-year resident of Minnesota.
64.22 	(b) The decedent's final income tax return, and other
64.23 	income tax returns for prior years where the decedent had gross
64.24 	income in excess of the minimum amount at which an individual is
64.25 	required to file and did not file, must be filed by the
64.26 	decedent's personal representative, if any.  If there is no
64.27 	personal representative, the return or returns must be filed by
64.28 	the transferees, as defined in section 289A.38, subdivision 13,
64.29 	who receive property of the decedent.
64.30 	(c) The term "gross income," as it is used in this section,
64.31 	has the same meaning given it in section 290.01, subdivision 20.
64.32 	
EFFECTIVE DATE. This section is effective for taxable
64.33 	years beginning after December 31, 2004.

64.34 	Sec. 2. Minnesota Statutes 2004, section 289A.08,
64.35 	subdivision 7, is amended to read:
64.36 		Subd. 7.Composite income tax returns for nonresident
65.1 	partners, shareholders, and beneficiaries.  (a) The commissioner
65.2 	may allow a partnership with nonresident partners to file a
65.3 	composite return and to pay the tax on behalf of nonresident
65.4 	partners who have no other Minnesota source income.  This
65.5 	composite return must include the names, addresses, Social
65.6 	Security numbers, income allocation, and tax liability for the
65.7 	nonresident partners electing to be covered by the composite
65.8 	return.
65.9 	(b) The computation of a partner's tax liability must be
65.10 	determined by multiplying the income allocated to that partner
65.11 	by the highest rate used to determine the tax liability for
65.12 	individuals under section 290.06, subdivision 2c.  Nonbusiness
65.13 	deductions, standard deductions, or personal exemptions are not
65.14 	allowed.
65.15 	(c) The partnership must submit a request to use this
65.16 	composite return filing method for nonresident partners.  The
65.17 	requesting partnership must file a composite return in the form
65.18 	prescribed by the commissioner of revenue.  The filing of a
65.19 	composite return is considered a request to use the composite
65.20 	return filing method.
65.21 	(d) The electing partner must not have any Minnesota source
65.22 	income other than the income from the partnership and other
65.23 	electing partnerships.  If it is determined that the electing
65.24 	partner has other Minnesota source income, the inclusion of the
65.25 	income and tax liability for that partner under this provision
65.26 	will not constitute a return to satisfy the requirements of
65.27 	subdivision 1.  The tax paid for the individual as part of the
65.28 	composite return is allowed as a payment of the tax by the
65.29 	individual on the date on which the composite return payment was
65.30 	made.  If the electing nonresident partner has no other
65.31 	Minnesota source income, filing of the composite return is a
65.32 	return for purposes of subdivision 1.
65.33 	(e) This subdivision does not negate the requirement that
65.34 	an individual pay estimated tax if the individual's liability
65.35 	would exceed the requirements set forth in section 289A.25.  A
65.36 	composite estimate may, however, be filed in a manner similar to
66.1 	and containing the information required under paragraph (a).
66.2 	(f) If an electing partner's share of the partnership's
66.3 	gross income from Minnesota sources is less than the filing
66.4 	requirements for a nonresident under this subdivision, the tax
66.5 	liability is zero.  However, a statement showing the partner's
66.6 	share of gross income must be included as part of the composite
66.7 	return.
66.8 	(g) The election provided in this subdivision is not only 
66.9 	available to any a partner other than who has no other Minnesota
66.10 	source income and who is either (1) a full-year nonresident
66.11 	individual who has no other Minnesota source income or (2) a
66.12 	trust or estate that does not claim a deduction under either
66.13 	section 651 or 661 of the Internal Revenue Code.
66.14 	(h) A corporation defined in section 290.9725 and its
66.15 	nonresident shareholders may make an election under this
66.16 	paragraph.  The provisions covering the partnership apply to the
66.17 	corporation and the provisions applying to the partner apply to
66.18 	the shareholder.
66.19 	(i) Estates and trusts distributing current income only and
66.20 	the nonresident individual beneficiaries of the estates or
66.21 	trusts may make an election under this paragraph.  The
66.22 	provisions covering the partnership apply to the estate or
66.23 	trust.  The provisions applying to the partner apply to the
66.24 	beneficiary.
66.25 	(j) For the purposes of this subdivision, "income" means
66.26 	the partner's share of federal adjusted gross income from the
66.27 	partnership modified by the additions provided in section
66.28 	290.01, subdivision 19a, clauses (6) to (9) and (11), and the
66.29 	subtractions provided in:  (i) section 290.01, subdivision 19b,
66.30 	clause (9), to the extent the amount is assignable or allocable
66.31 	to Minnesota under section 290.17; and (ii) article 4, section
66.32 	4, clause (11).  The subtraction allowed under section 290.01,
66.33 	subdivision 19b, clause (9), is only allowed on the composite
66.34 	tax computation to the extent the electing partner would have
66.35 	been allowed the subtraction.
66.36 	
EFFECTIVE DATE. This section is effective for tax years
67.1 	ending after December 31, 2004.

67.2 	Sec. 3. Minnesota Statutes 2004, section 289A.08,
67.3 	subdivision 13, is amended to read:
67.4 		Subd. 13.Long and short forms.  The commissioner shall
67.5 	provide a long form individual income tax return and may provide
67.6 	a short form individual income tax return.  The returns shall be
67.7 	in a form that is consistent with the provisions of chapter 290,
67.8 	notwithstanding any other law to the contrary.  The nongame
67.9 	wildlife checkoff provided in section 290.431 and the dependent
67.10 	care credit provided in section 290.067 must be included on the
67.11 	short form. The commissioner must provide information on local
67.12 	use taxes in the individual income tax instruction booklet.  The
67.13 	commissioner must provide this information in the same section
67.14 	of the booklet that provides information on the state use tax.
67.15 	
EFFECTIVE DATE. This section is effective for taxable
67.16 	years beginning after December 31, 2004.

67.17 	Sec. 4. Minnesota Statutes 2004, section 289A.20,
67.18 	subdivision 2, is amended to read:
67.19 		Subd. 2.Withholding from wages, entertainer withholding,
67.20 	withholding from payments to out-of-state contractors, and
67.21 	withholding by partnerships and small business corporations.
 67.22 	(a) A tax required to be deducted and withheld during the
67.23 	quarterly period must be paid on or before the last day of the
67.24 	month following the close of the quarterly period, unless an
67.25 	earlier time for payment is provided.  A tax required to be
67.26 	deducted and withheld from compensation of an entertainer and
67.27 	from a payment to an out-of-state contractor must be paid on or
67.28 	before the date the return for such tax must be filed under
67.29 	section 289A.18, subdivision 2.  Taxes required to be deducted
67.30 	and withheld by partnerships and ,S corporations, and trusts 
67.31 	must be paid on or before the date the return must be filed
67.32 	under section 289A.18, subdivision 2a quarterly basis as
67.33 	estimated taxes under section 289A.25 for partnerships and
67.34 	trusts and under section 289A.26 for S corporations.
67.35 	(b) An employer who, during the previous quarter, withheld
67.36 	more than $1,500 of tax under section 290.92, subdivision 2a or
68.1 	3, or 290.923, subdivision 2, must deposit tax withheld under
68.2 	those sections with the commissioner within the time allowed to
68.3 	deposit the employer's federal withheld employment taxes under
68.4 	Code of Federal Regulations, title 26, section 31.6302-1, as
68.5 	amended through December 31, 2001, without regard to the safe
68.6 	harbor or de minimis rules in subparagraph (f) or the one-day
68.7 	rule in subsection (c), clause (3).  Taxpayers must submit a
68.8 	copy of their federal notice of deposit status to the
68.9 	commissioner upon request by the commissioner.
68.10 	(c) The commissioner may prescribe by rule other return
68.11 	periods or deposit requirements.  In prescribing the reporting
68.12 	period, the commissioner may classify payors according to the
68.13 	amount of their tax liability and may adopt an appropriate
68.14 	reporting period for the class that the commissioner judges to
68.15 	be consistent with efficient tax collection.  In no event will
68.16 	the duration of the reporting period be more than one year.
68.17 	(d) If less than the correct amount of tax is paid to the
68.18 	commissioner, proper adjustments with respect to both the tax
68.19 	and the amount to be deducted must be made, without interest, in
68.20 	the manner and at the times the commissioner prescribes.  If the
68.21 	underpayment cannot be adjusted, the amount of the underpayment
68.22 	will be assessed and collected in the manner and at the times
68.23 	the commissioner prescribes.
68.24 	(e) If the aggregate amount of the tax withheld during a
68.25 	fiscal year ending June 30 under section 290.92, subdivision 2a
68.26 	or 3, is equal to or exceeds the amounts established for
68.27 	remitting federal withheld taxes pursuant to the regulations
68.28 	promulgated under section 6302(h) of the Internal Revenue Code,
68.29 	the employer must remit each required deposit for wages paid in
68.30 	the subsequent calendar year by electronic means.
68.31 	(f) A third-party bulk filer as defined in section 290.92,
68.32 	subdivision 30, paragraph (a), clause (2), who remits
68.33 	withholding deposits must remit all deposits by electronic means
68.34 	as provided in paragraph (e), regardless of the aggregate amount
68.35 	of tax withheld during a fiscal year for all of the employers.
68.36 	
EFFECTIVE DATE. This section is effective for tax years
69.1 	beginning after December 31, 2005.

69.2 	Sec. 5. Minnesota Statutes 2004, section 290.01,
69.3 	subdivision 6b, is amended to read:
69.4 		Subd. 6b.Foreign operating corporation.  The term
69.5 	"foreign operating corporation," when applied to a corporation,
69.6 	means a domestic corporation with the following characteristics:
69.7 	(1) it is part of a unitary business at least one member of
69.8 	which is taxable in this state;
69.9 	(2) it is not a foreign sales corporation under section 922
69.10 	of the Internal Revenue Code, as amended through December 31,
69.11 	1999, for the taxable year; and 
69.12 	(3) either (i) the average of the percentages of its
69.13 	property and payrolls, including the pro rata share of its
69.14 	unitary partnerships' property and payrolls,assigned to
69.15 	locations inside outside the United States and the District of
69.16 	Columbia, excluding the commonwealth of Puerto Rico and
69.17 	possessions of the United States, where the United States
69.18 	includes the District of Columbia and excludes the commonwealth
69.19 	of Puerto Rico and possessions of the United States,as
69.20 	determined under section 290.191 or 290.20, is 20 80 percent or
69.21 	less more; or (ii) it has in effect a valid election under
69.22 	section 936 of the Internal Revenue Code; and 
69.23 	(4) it has $1,000,000 of payroll and $2,000,000 of
69.24 	property, as determined under section 290.191 or 290.20, that
69.25 	are located outside the United States.  If the domestic
69.26 	corporation does not have payroll as determined under section
69.27 	290.191 or 290.20, but it or its partnerships have paid
69.28 	$1,000,000 for work, performed directly for the domestic
69.29 	corporation or the partnerships, outside the United States, then
69.30 	paragraph (3)(i) shall not require payrolls to be included in
69.31 	the average calculation.
69.32 	
EFFECTIVE DATE. This section is effective for tax years
69.33 	beginning after December 31, 2004.

69.34 	Sec. 6. Minnesota Statutes 2004, section 290.01,
69.35 	subdivision 7, is amended to read:
69.36 		Subd. 7.Resident.  (a) The term "resident" means any
70.1 	individual domiciled in Minnesota, except that an individual is
70.2 	not a "resident" for the period of time that the individual is
70.3 	either:
70.4 	(1) on active duty stationed outside of Minnesota while in
70.5 	the armed forces of the United States or the United Nations; or 
70.6 	(2) a "qualified individual" as defined in section
70.7 	911(d)(1) of the Internal Revenue Code, if the qualified
70.8 	individual notifies the county within three months of moving out
70.9 	of the country that homestead status be revoked for the
70.10 	Minnesota residence of the qualified individual, and the
70.11 	property is not classified as a homestead while the individual
70.12 	remains a qualified individual.
70.13 	(b) "Resident" also means any individual domiciled outside
70.14 	the state who maintains a place of abode in the state and spends
70.15 	in the aggregate more than one-half of the tax year in
70.16 	Minnesota, unless:
70.17 	(1) the individual or the spouse of the individual is in
70.18 	the armed forces of the United States; or
70.19 	(2) the individual is covered under the reciprocity
70.20 	provisions in section 290.081.
70.21 	For purposes of this subdivision, presence within the state
70.22 	for any part of a calendar day constitutes a day spent in the
70.23 	state.  Individuals shall keep adequate records to substantiate
70.24 	the days spent outside the state.
70.25 	The term "abode" means a dwelling maintained by an
70.26 	individual, whether or not owned by the individual and whether
70.27 	or not occupied by the individual, and includes a dwelling place
70.28 	owned or leased by the individual's spouse.
70.29 	(c) Neither the commissioner nor any court shall consider
70.30 	charitable contributions made by an individual within or without
70.31 	the state in determining if the individual is domiciled in
70.32 	Minnesota.
70.33 	
EFFECTIVE DATE. This section is effective for tax years
70.34 	beginning after December 31, 2004.

70.35 	Sec. 7. Minnesota Statutes 2004, section 290.01,
70.36 	subdivision 19b, as amended by Laws 2005, chapter 151, article
71.1 	6, section 13, is amended to read:
71.2 		Subd. 19b.Subtractions from federal taxable income. For
71.3 	individuals, estates, and trusts, there shall be subtracted from
71.4 	federal taxable income:
71.5 	(1) net interest income on obligations of any authority,
71.6 	commission, or instrumentality of the United States to the
71.7 	extent includable in taxable income for federal income tax
71.8 	purposes but exempt from state income tax under the laws of the
71.9 	United States;
71.10 	(2) if included in federal taxable income, the amount of
71.11 	any overpayment of income tax to Minnesota or to any other
71.12 	state, for any previous taxable year, whether the amount is
71.13 	received as a refund or as a credit to another taxable year's
71.14 	income tax liability;
71.15 	(3) the amount paid to others, less the amount used to
71.16 	claim the credit allowed under section 290.0674, not to exceed
71.17 	$1,625 for each qualifying child in grades kindergarten to 6 and
71.18 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
71.19 	textbooks, and transportation of each qualifying child in
71.20 	attending an elementary or secondary school situated in
71.21 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
71.22 	wherein a resident of this state may legally fulfill the state's
71.23 	compulsory attendance laws, which is not operated for profit,
71.24 	and which adheres to the provisions of the Civil Rights Act of
71.25 	1964 and chapter 363A.  For the purposes of this clause,
71.26 	"tuition" includes fees or tuition as defined in section
71.27 	290.0674, subdivision 1, clause (1).  As used in this clause,
71.28 	"textbooks" includes books and other instructional materials and
71.29 	equipment purchased or leased for use in elementary and
71.30 	secondary schools in teaching only those subjects legally and
71.31 	commonly taught in public elementary and secondary schools in
71.32 	this state.  Equipment expenses qualifying for deduction
71.33 	includes expenses as defined and limited in section 290.0674,
71.34 	subdivision 1, clause (3).  "Textbooks" does not include
71.35 	instructional books and materials used in the teaching of
71.36 	religious tenets, doctrines, or worship, the purpose of which is
72.1 	to instill such tenets, doctrines, or worship, nor does it
72.2 	include books or materials for, or transportation to,
72.3 	extracurricular activities including sporting events, musical or
72.4 	dramatic events, speech activities, driver's education, or
72.5 	similar programs.  For purposes of the subtraction provided by
72.6 	this clause, "qualifying child" has the meaning given in section
72.7 	32(c)(3) of the Internal Revenue Code;
72.8 	(4) income as provided under section 290.0802;
72.9 	(5) to the extent included in federal adjusted gross
72.10 	income, income realized on disposition of property exempt from
72.11 	tax under section 290.491;
72.12 	(6) to the extent not deducted in determining federal
72.13 	taxable income by an individual who does not itemize deductions
72.14 	for federal income tax purposes for the taxable year, an amount
72.15 	equal to 50 percent of the excess of charitable contributions
72.16 	allowable as a deduction for the taxable year under section
72.17 	170(a) of the Internal Revenue Code over $500;
72.18 	(7) for taxable years beginning before January 1, 2008, the
72.19 	amount of the federal small ethanol producer credit allowed
72.20 	under section 40(a)(3) of the Internal Revenue Code which is
72.21 	included in gross income under section 87 of the Internal
72.22 	Revenue Code;
72.23 	(8) for individuals who are allowed a federal foreign tax
72.24 	credit for taxes that do not qualify for a credit under section
72.25 	290.06, subdivision 22, an amount equal to the carryover of
72.26 	subnational foreign taxes for the taxable year, but not to
72.27 	exceed the total subnational foreign taxes reported in claiming
72.28 	the foreign tax credit.  For purposes of this clause, "federal
72.29 	foreign tax credit" means the credit allowed under section 27 of
72.30 	the Internal Revenue Code, and "carryover of subnational foreign
72.31 	taxes" equals the carryover allowed under section 904(c) of the
72.32 	Internal Revenue Code minus national level foreign taxes to the
72.33 	extent they exceed the federal foreign tax credit;
72.34 	(9) in each of the five tax years immediately following the
72.35 	tax year in which an addition is required under subdivision 19a,
72.36 	clause (7), or 19c, clause (15), in the case of a shareholder of
73.1 	a corporation that is an S corporation, an amount equal to
73.2 	one-fifth of the delayed depreciation.  For purposes of this
73.3 	clause, "delayed depreciation" means the amount of the addition
73.4 	made by the taxpayer under subdivision 19a, clause (7), or
73.5 	subdivision 19c, clause (15), in the case of a shareholder of an
73.6 	S corporation, minus the positive value of any net operating
73.7 	loss under section 172 of the Internal Revenue Code generated
73.8 	for the tax year of the addition.  The resulting delayed
73.9 	depreciation cannot be less than zero; and 
73.10 	(10) job opportunity building zone income as provided under
73.11 	section 469.316.;
73.12 	(11) the amount of compensation paid to members of the
73.13 	Minnesota National Guard or other reserve components of the
73.14 	United States military for active service performed in
73.15 	Minnesota, excluding compensation for services performed under
73.16 	the Active Guard Reserve (AGR) program.  For purposes of this
73.17 	clause, "active service" means (i) state active service as
73.18 	defined in section 190.05, subdivision 5a, clause (1); (ii)
73.19 	federally funded state active service as defined in section
73.20 	190.05, subdivision 5b; or (iii) federal active service as
73.21 	defined in section 190.05, subdivision 5c, but "active service"
73.22 	excludes services performed exclusively for purposes of basic
73.23 	combat training, advanced individual training, annual training,
73.24 	and periodic inactive duty training; special training
73.25 	periodically made available to reserve members; and service
73.26 	performed in accordance with section 190.08, subdivision 3;
73.27 	(12) the amount of compensation paid to Minnesota residents
73.28 	who are members of the armed forces of the United States or
73.29 	United Nations for active duty performed outside Minnesota; and 
73.30 	(13) an amount, not to exceed $10,000, equal to qualified
73.31 	expenses related to a qualified donor's donation, while living,
73.32 	of one or more of the qualified donor's organs to another person
73.33 	for human organ transplantation.  For purposes of this clause,
73.34 	"organ" means all or part of an individual's liver, pancreas,
73.35 	kidney, intestine, lung, or bone marrow; "human organ
73.36 	transplantation" means the medical procedure by which transfer
74.1 	of a human organ is made from the body of one person to the body
74.2 	of another person; "qualified expenses" means unreimbursed
74.3 	expenses for both the individual and the qualified donor for (i)
74.4 	travel, (ii) lodging, and (iii) lost wages net of sick pay,
74.5 	except that such expenses may be subtracted under this clause
74.6 	only once; and "qualified donor" means the individual or the
74.7 	individual's dependent, as defined in section 152 of the
74.8 	Internal Revenue Code.  An individual may claim the subtraction
74.9 	in this clause for each instance of organ donation for
74.10 	transplantation during the taxable year in which the qualified
74.11 	expenses occur.
74.12 	
EFFECTIVE DATE. This section is effective for tax years
74.13 	beginning after December 31, 2004.

74.14 	Sec. 8. Minnesota Statutes 2004, section 290.067,
74.15 	subdivision 1, is amended to read:
74.16 		Subdivision 1.Amount of credit.  (a) A taxpayer may take
74.17 	as a credit against the tax due from the taxpayer and a spouse,
74.18 	if any, under this chapter an amount equal to the dependent care
74.19 	credit for which the taxpayer is eligible pursuant to the
74.20 	provisions of section 21 of the Internal Revenue Code subject to
74.21 	the limitations provided in subdivision 2 except that in
74.22 	determining whether the child qualified as a dependent, income
74.23 	received as a Minnesota family investment program grant or
74.24 	allowance to or on behalf of the child must not be taken into
74.25 	account in determining whether the child received more than half
74.26 	of the child's support from the taxpayer, and the provisions of
74.27 	section 32(b)(1)(D) of the Internal Revenue Code do not apply.
74.28 	(b) If a child who has not attained the age of six years at
74.29 	the close of the taxable year is cared for at a licensed family
74.30 	day care home operated by the child's parent, the taxpayer is
74.31 	deemed to have paid employment-related expenses.  If the child
74.32 	is 16 months old or younger at the close of the taxable year,
74.33 	the amount of expenses deemed to have been paid equals the
74.34 	maximum limit for one qualified individual under section 21(c)
74.35 	and (d) of the Internal Revenue Code.  If the child is older
74.36 	than 16 months of age but has not attained the age of six years
75.1 	at the close of the taxable year, the amount of expenses deemed
75.2 	to have been paid equals the amount the licensee would charge
75.3 	for the care of a child of the same age for the same number of
75.4 	hours of care.
75.5 	(c) If a married couple:
75.6 	(1) has a child who has not attained the age of one year at
75.7 	the close of the taxable year;
75.8 	(2) files a joint tax return for the taxable year; and
75.9 	(3) does not participate in a dependent care assistance
75.10 	program as defined in section 129 of the Internal Revenue Code,
75.11 	in lieu of the actual employment related expenses paid for that
75.12 	child under paragraph (a) or the deemed amount under paragraph
75.13 	(b), the lesser of (i) the combined earned income of the couple
75.14 	or (ii) the amount of the maximum limit for one qualified
75.15 	individual under section 21(c) and (d) of the Internal Revenue
75.16 	Code will be deemed to be the employment related expense paid
75.17 	for that child.  The earned income limitation of section 21(d)
75.18 	of the Internal Revenue Code shall not apply to this deemed
75.19 	amount.  These deemed amounts apply regardless of whether any
75.20 	employment-related expenses have been paid.
75.21 	(d) If the taxpayer is not required and does not file a
75.22 	federal individual income tax return for the tax year, no credit
75.23 	is allowed for any amount paid to any person unless:
75.24 	(1) the name, address, and taxpayer identification number
75.25 	of the person are included on the return claiming the credit; or
75.26 	(2) if the person is an organization described in section
75.27 	501(c)(3) of the Internal Revenue Code and exempt from tax under
75.28 	section 501(a) of the Internal Revenue Code, the name and
75.29 	address of the person are included on the return claiming the
75.30 	credit.
75.31 	In the case of a failure to provide the information required
75.32 	under the preceding sentence, the preceding sentence does not
75.33 	apply if it is shown that the taxpayer exercised due diligence
75.34 	in attempting to provide the information required.
75.35 	In the case of a nonresident, part-year resident, or a
75.36 	person who has earned income not subject to tax under this
76.1 	chapter including earned income excluded pursuant to section
76.2 	290.01, subdivision 19b, clause (11) (10), the credit determined
76.3 	under section 21 of the Internal Revenue Code must be allocated
76.4 	based on the ratio by which the earned income of the claimant
76.5 	and the claimant's spouse from Minnesota sources bears to the
76.6 	total earned income of the claimant and the claimant's spouse.
76.7 	For residents of Minnesota, the subtractions for military
76.8 	pay under section 290.01, subdivision 19b, clauses (11) and
76.9 	(12), are not considered "earned income not subject to tax under
76.10 	this chapter." 
76.11 	
EFFECTIVE DATE. This section is effective for tax years
76.12 	beginning after December 31, 2004.

76.13 	Sec. 9. Minnesota Statutes 2004, section 290.0671,
76.14 	subdivision 1, is amended to read:
76.15 		Subdivision 1.Credit allowed.  (a) An individual is
76.16 	allowed a credit against the tax imposed by this chapter equal
76.17 	to a percentage of earned income.  To receive a credit, a
76.18 	taxpayer must be eligible for a credit under section 32 of the
76.19 	Internal Revenue Code.
76.20 	(b) For individuals with no qualifying children, the credit
76.21 	equals 1.9125 percent of the first $4,620 of earned income.  The
76.22 	credit is reduced by 1.9125 percent of earned income or modified 
76.23 	adjusted gross income, whichever is greater, in excess of
76.24 	$5,770, but in no case is the credit less than zero.
76.25 	(c) For individuals with one qualifying child, the credit
76.26 	equals 8.5 percent of the first $6,920 of earned income and 8.5
76.27 	percent of earned income over $12,080 but less than $13,450.
76.28 	The credit is reduced by 5.73 percent of earned income or
76.29 	modified adjusted gross income, whichever is greater, in excess
76.30 	of $15,080, but in no case is the credit less than zero.
76.31 	(d) For individuals with two or more qualifying children,
76.32 	the credit equals ten percent of the first $9,720 of earned
76.33 	income and 20 percent of earned income over $14,860 but less
76.34 	than $16,800.  The credit is reduced by 10.3 percent of earned
76.35 	income or modified adjusted gross income, whichever is greater,
76.36 	in excess of $17,890, but in no case is the credit less than
77.1 	zero.
77.2 	(e) For a nonresident or part-year resident, the credit
77.3 	must be allocated based on the percentage calculated under
77.4 	section 290.06, subdivision 2c, paragraph (e).
77.5 	(f) For a person who was a resident for the entire tax year
77.6 	and has earned income not subject to tax under this chapter,
77.7 	including income excluded under section 290.01, subdivision 19b,
77.8 	clause (11) (10), the credit must be allocated based on the
77.9 	ratio of federal adjusted gross income reduced by the earned
77.10 	income not subject to tax under this chapter over federal
77.11 	adjusted gross income. For purposes of this paragraph, the
77.12 	subtractions for military pay under section 290.01, subdivision
77.13 	19b, clauses (11) and (12), are not considered "earned income
77.14 	not subject to tax under this chapter." 
77.15 	(g) For tax years beginning after December 31, 2001, and
77.16 	before December 31, 2004, the $5,770 in paragraph (b), the
77.17 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
77.18 	after being adjusted for inflation under subdivision 7, are each
77.19 	increased by $1,000 for married taxpayers filing joint returns.
77.20 	(h) For tax years beginning after December 31, 2004, and
77.21 	before December 31, 2007, the $5,770 in paragraph (b), the
77.22 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
77.23 	after being adjusted for inflation under subdivision 7, are each
77.24 	increased by $2,000 for married taxpayers filing joint returns.
77.25 	(i) For tax years beginning after December 31, 2007, and
77.26 	before December 31, 2010, the $5,770 in paragraph (b), the
77.27 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
77.28 	after being adjusted for inflation under subdivision 7, are each
77.29 	increased by $3,000 for married taxpayers filing joint returns.
77.30 	For tax years beginning after December 31, 2008, the $3,000 is
77.31 	adjusted annually for inflation under subdivision 7.
77.32 	(j) The commissioner shall construct tables showing the
77.33 	amount of the credit at various income levels and make them
77.34 	available to taxpayers.  The tables shall follow the schedule
77.35 	contained in this subdivision, except that the commissioner may
77.36 	graduate the transition between income brackets.
78.1 	
EFFECTIVE DATE. This section is effective for tax years
78.2 	beginning after December 31, 2004.

78.3 	Sec. 10. Minnesota Statutes 2004, section 290.0674,
78.4 	subdivision 2, is amended to read:
78.5 		Subd. 2.Limitations.  (a) For claimants with income not
78.6 	greater than $33,500, the maximum credit allowed for a family is
78.7 	$1,000 per qualifying child and $2,000 per family multiplied by
78.8 	the number of qualifying children in kindergarten through grade
78.9 	12 in the family. No credit is allowed for education-related
78.10 	expenses for claimants with income greater than $37,500.The
78.11 	maximum credit per child for families with one qualifying child
78.12 	in kindergarten through grade 12 is reduced by $1 for each $4 of
78.13 	household income over $33,500, and the maximum credit per family 
78.14 	for families with two or more qualifying children in
78.15 	kindergarten through grade 12 is reduced by $2 for each $4 of
78.16 	household income over $33,500, but in no case is the credit less
78.17 	than zero.
78.18 	For purposes of this section "income" has the meaning given
78.19 	in section 290.067, subdivision 2a.  In the case of a married
78.20 	claimant, a credit is not allowed unless a joint income tax
78.21 	return is filed.
78.22 	(b) For a nonresident or part-year resident, the credit
78.23 	determined under subdivision 1 and the maximum credit amount in
78.24 	paragraph (a) must be allocated using the percentage calculated
78.25 	in section 290.06, subdivision 2c, paragraph (e).
78.26 	
EFFECTIVE DATE. This section is effective for taxable
78.27 	years beginning after December 31, 2004.

78.28 	Sec. 11. Minnesota Statutes 2004, section 290.091,
78.29 	subdivision 2, is amended to read:
78.30 		Subd. 2.Definitions.  For purposes of the tax imposed by
78.31 	this section, the following terms have the meanings given:
78.32 	(a) "Alternative minimum taxable income" means the sum of
78.33 	the following for the taxable year:
78.34 	(1) the taxpayer's federal alternative minimum taxable
78.35 	income as defined in section 55(b)(2) of the Internal Revenue
78.36 	Code;
79.1 	(2) the taxpayer's itemized deductions allowed in computing
79.2 	federal alternative minimum taxable income, but excluding:
79.3 	(i) the charitable contribution deduction under section 170
79.4 	of the Internal Revenue Code:
79.5 	(A) for taxable years beginning before January 1, 2006,to
79.6 	the extent that the deduction exceeds 1.0 percent of adjusted
79.7 	gross income, as defined ;
79.8 	(B) for taxable years beginning after December 31, 2005, to
79.9 	the full extent of the deduction.
79.10 	For purposes of this clause, "adjusted gross income" has
79.11 	the meaning given in section 62 of the Internal Revenue Code;
79.12 	(3) for depletion allowances computed under section 613A(c)
79.13 	of the Internal Revenue Code, with respect to each property (as
79.14 	defined in section 614 of the Internal Revenue Code), to the
79.15 	extent not included in federal alternative minimum taxable
79.16 	income, the excess of the deduction for depletion allowable
79.17 	under section 611 of the Internal Revenue Code for the taxable
79.18 	year over the adjusted basis of the property at the end of the
79.19 	taxable year (determined without regard to the depletion
79.20 	deduction for the taxable year);
79.21 	(4) to the extent not included in federal alternative
79.22 	minimum taxable income, the amount of the tax preference for
79.23 	intangible drilling cost under section 57(a)(2) of the Internal
79.24 	Revenue Code determined without regard to subparagraph (E);
79.25 	(5) to the extent not included in federal alternative
79.26 	minimum taxable income, the amount of interest income as
79.27 	provided by section 290.01, subdivision 19a, clause (1); and
79.28 	(6) the amount of addition required by section 290.01,
79.29 	subdivision 19a, clause (7);
79.30 	less the sum of the amounts determined under the following:
79.31 	(1) interest income as defined in section 290.01,
79.32 	subdivision 19b, clause (1);
79.33 	(2) an overpayment of state income tax as provided by
79.34 	section 290.01, subdivision 19b, clause (2), to the extent
79.35 	included in federal alternative minimum taxable income;
79.36 	(3) the amount of investment interest paid or accrued
80.1 	within the taxable year on indebtedness to the extent that the
80.2 	amount does not exceed net investment income, as defined in
80.3 	section 163(d)(4) of the Internal Revenue Code.  Interest does
80.4 	not include amounts deducted in computing federal adjusted gross
80.5 	income; and
80.6 	(4) amounts subtracted from federal taxable income as
80.7 	provided by section 290.01, subdivision 19b, clauses (10) and
80.8 	(11) (9) to (13).
80.9 	In the case of an estate or trust, alternative minimum
80.10 	taxable income must be computed as provided in section 59(c) of
80.11 	the Internal Revenue Code.
80.12 	(b) "Investment interest" means investment interest as
80.13 	defined in section 163(d)(3) of the Internal Revenue Code.
80.14 	(c) "Tentative minimum tax" equals 6.4 percent of
80.15 	alternative minimum taxable income after subtracting the
80.16 	exemption amount determined under subdivision 3.
80.17 	(d) "Regular tax" means the tax that would be imposed under
80.18 	this chapter (without regard to this section and section
80.19 	290.032), reduced by the sum of the nonrefundable credits
80.20 	allowed under this chapter.
80.21 	(e) "Net minimum tax" means the minimum tax imposed by this
80.22 	section.
80.23 	
EFFECTIVE DATE. This section is effective for taxable
80.24 	years beginning after December 31, 2004.

80.25 	Sec. 12. Minnesota Statutes 2004, section 290.0922,
80.26 	subdivision 2, is amended to read:
80.27 		Subd. 2.Exemptions.  The following entities are exempt
80.28 	from the tax imposed by this section:
80.29 	(1) corporations exempt from tax under section 290.05;
80.30 	(2) real estate investment trusts;
80.31 	(3) regulated investment companies or a fund thereof; and
80.32 	(4) entities having a valid election in effect under
80.33 	section 860D(b) of the Internal Revenue Code;
80.34 	(5) town and farmers' mutual insurance companies;
80.35 	(6) cooperatives organized under chapter 308A or 308B that
80.36 	provide housing exclusively to persons age 55 and over and are
81.1 	classified as homesteads under section 273.124, subdivision 3;
81.2 	and
81.3 	(7) an entity, if for the taxable year all of its property
81.4 	is located in a job opportunity building zone designated under
81.5 	section 469.314 and all of its payroll is a job opportunity
81.6 	building zone payroll under section 469.310.
81.7 	Entities not specifically exempted by this subdivision are
81.8 	subject to tax under this section, notwithstanding section
81.9 	290.05.
81.10 	
EFFECTIVE DATE. This section is effective for tax years
81.11 	beginning after December 31, 2004.

81.12 	Sec. 13. Minnesota Statutes 2004, section 290.191,
81.13 	subdivision 2, is amended to read:
81.14 		Subd. 2.Apportionment formula of general application.
 81.15 	(a) Except for those trades or businesses required to use a
81.16 	different formula under subdivision 3 or section 290.36, and for
81.17 	those trades or businesses that receive permission to use some
81.18 	other method under section 290.20 or under subdivision 4, a
81.19 	trade or business required to apportion its net income must
81.20 	apportion its income to this state on the basis of the
81.21 	percentage obtained by taking the sum of:
81.22 	(1) 75 the percent for the sales factor under paragraph (b) 
81.23 	of the percentage which the sales made within this state in
81.24 	connection with the trade or business during the tax period are
81.25 	of the total sales wherever made in connection with the trade or
81.26 	business during the tax period;
81.27 	(2) 12.5 the percent for the property factor under
81.28 	paragraph (b) of the percentage which the total tangible
81.29 	property used by the taxpayer in this state in connection with
81.30 	the trade or business during the tax period is of the total
81.31 	tangible property, wherever located, used by the taxpayer in
81.32 	connection with the trade or business during the tax period; and
81.33 	(3) 12.5 the percent for the payroll factor under paragraph
81.34 	(b) of the percentage which the taxpayer's total payrolls paid
81.35 	or incurred in this state or paid in respect to labor performed
81.36 	in this state in connection with the trade or business during
82.1 	the tax period are of the taxpayer's total payrolls paid or
82.2 	incurred in connection with the trade or business during the tax
82.3 	period.
82.4 	(b) For purposes of paragraph (a) and subdivision 3, the
82.5 	following percentages apply for the taxable years specified:
82.6 	Taxable years Sales factor Property Payroll
82.7 	beginning percent factor factor
82.8 	during calendar percent percent
82.9 	year
82.10 	     2007 78 11 11
82.11 	     2008 81 9.5 9.5
82.12 	     2009 84 8 8
82.13 	     2010 87 6.5 6.5
82.14 	     2011 90 5 5
82.15 	     2012 93 3.5 3.5
82.16 	     2013 96 2 2
82.17 	     2014 and later 100 0 0
82.18 	      calendar years 
82.19 	
EFFECTIVE DATE. This section is effective for tax years
82.20 	beginning after December 31, 2006.

82.21 	Sec. 14. Minnesota Statutes 2004, section 290.191,
82.22 	subdivision 3, is amended to read:
82.23 		Subd. 3.Apportionment formula for financial
82.24 	institutions.  Except for an investment company required to
82.25 	apportion its income under section 290.36, a financial
82.26 	institution that is required to apportion its net income must
82.27 	apportion its net income to this state on the basis of the
82.28 	percentage obtained by taking the sum of:
82.29 	(1) 75 the percent for the sales factor under subdivision
82.30 	2, paragraph (b),of the percentage which the receipts from
82.31 	within this state in connection with the trade or business
82.32 	during the tax period are of the total receipts in connection
82.33 	with the trade or business during the tax period, from wherever
82.34 	derived;
82.35 	(2) 12.5 the percent for the property factor under
82.36 	subdivision 2, paragraph (b),of the percentage which the sum of
83.1 	the total tangible property used by the taxpayer in this state
83.2 	and the intangible property owned by the taxpayer and attributed
83.3 	to this state in connection with the trade or business during
83.4 	the tax period is of the sum of the total tangible property,
83.5 	wherever located, used by the taxpayer and the intangible
83.6 	property owned by the taxpayer and attributed to all states in
83.7 	connection with the trade or business during the tax period; and
83.8 	(3) 12.5 the percent for the payroll factor under
83.9 	subdivision 2, paragraph (b),of the percentage which the
83.10 	taxpayer's total payrolls paid or incurred in this state or paid
83.11 	in respect to labor performed in this state in connection with
83.12 	the trade or business during the tax period are of the
83.13 	taxpayer's total payrolls paid or incurred in connection with
83.14 	the trade or business during the tax period.
83.15 	
EFFECTIVE DATE. This section is effective for tax years
83.16 	beginning after December 31, 2006.

83.17 	Sec. 15. Minnesota Statutes 2004, section 290.9705,
83.18 	subdivision 1, is amended to read:
83.19 		Subdivision 1.Withholding of payments to out-of-state
83.20 	contractors.  (a) In this section, "person" means a person,
83.21 	corporation, or cooperative, the state of Minnesota and its
83.22 	political subdivisions, and a city, county, and school district
83.23 	in Minnesota.
83.24 	(b) A person who in the regular course of business is
83.25 	hiring, contracting, or having a contract with a nonresident
83.26 	person or foreign corporation, as defined in Minnesota Statutes
83.27 	1986, section 290.01, subdivision 5, to perform construction
83.28 	work in Minnesota, shall deduct and withhold eight percent of
83.29 	every payment cumulative calendar year payments to the
83.30 	contractor if the contract exceeds or can reasonably be expected
83.31 	to exceed $100,000 which exceed $50,000.
83.32 	
EFFECTIVE DATE. This section is effective for payments
83.33 	made after December 31, 2005.

83.34 	Sec. 16. Minnesota Statutes 2004, section 298.01,
83.35 	subdivision 3, is amended to read:
83.36 		Subd. 3.Occupation tax; other ores.  Every person
84.1 	engaged in the business of mining or producing ores in this
84.2 	state, except iron ore or taconite concentrates, shall pay an
84.3 	occupation tax to the state of Minnesota as provided in this
84.4 	subdivision.  The tax is determined in the same manner as the
84.5 	tax imposed by section 290.02, except that sections 290.05,
84.6 	subdivision 1, clause (a), and 290.17, subdivision 4, and
84.7 	290.191, subdivision 2,do not apply. A person subject to
84.8 	occupation tax under this section shall apportion its net income
84.9 	on the basis of the percentage obtained by taking the sum of:
84.10 	(1) 75 percent of the percentage which the sales made
84.11 	within this state in connection with the trade or business
84.12 	during the tax period are of the total sales wherever made in
84.13 	connection with the trade or business during the tax period;
84.14 	(2) 12.5 percent of the percentage which the total tangible
84.15 	property used by the taxpayer in this state in connection with
84.16 	the trade or business during the tax period is of the total
84.17 	tangible property, wherever located, used by the taxpayer in
84.18 	connection with the trade or business during the tax period; and 
84.19 	(3) 12.5 percent of the percentage which the taxpayer's
84.20 	total payrolls paid or incurred in this state or paid in respect
84.21 	to labor performed in this state in connection with the trade or
84.22 	business during the tax period are of the taxpayer's total
84.23 	payrolls paid or incurred in connection with the trade or
84.24 	business during the tax period.
84.25 	The tax is in addition to all other taxes.
84.26 	
EFFECTIVE DATE. This section is effective for tax years
84.27 	beginning after December 31, 2006.

84.28 	Sec. 17. Minnesota Statutes 2004, section 298.01,
84.29 	subdivision 4, is amended to read:
84.30 		Subd. 4.Occupation tax; iron ore; taconite
84.31 	concentrates.  A person engaged in the business of mining or
84.32 	producing of iron ore, taconite concentrates or direct reduced
84.33 	ore in this state shall pay an occupation tax to the state of
84.34 	Minnesota.  The tax is determined in the same manner as the tax
84.35 	imposed by section 290.02, except that sections 290.05,
84.36 	subdivision 1, clause (a), and 290.17, subdivision 4, and
85.1 	290.191, subdivision 2,do not apply. A person subject to
85.2 	occupation tax under this section shall apportion its net income
85.3 	on the basis of the percentage obtained by taking the sum of:
85.4 	(1) 75 percent of the percentage which the sales made
85.5 	within this state in connection with the trade or business
85.6 	during the tax period are of the total sales wherever made in
85.7 	connection with the trade or business during the tax period;
85.8 	(2) 12.5 percent of the percentage which the total tangible
85.9 	property used by the taxpayer in this state in connection with
85.10 	the trade or business during the tax period is of the total
85.11 	tangible property, wherever located, used by the taxpayer in
85.12 	connection with the trade or business during the tax period; and 
85.13 	(3) 12.5 percent of the percentage which the taxpayer's
85.14 	total payrolls paid or incurred in this state or paid in respect
85.15 	to labor performed in this state in connection with the trade or
85.16 	business during the tax period are of the taxpayer's total
85.17 	payrolls paid or incurred in connection with the trade or
85.18 	business during the tax period.
85.19 	The tax is in addition to all other taxes.
85.20 	
EFFECTIVE DATE. This section is effective for tax years
85.21 	beginning after December 31, 2006.

85.22 	ARTICLE 4
85.23 	FEDERAL UPDATE

85.24 	Section 1. Minnesota Statutes 2004, section 289A.02,
85.25 	subdivision 7, is amended to read:
85.26 		Subd. 7.Internal revenue code.  Unless specifically
85.27 	defined otherwise, "Internal Revenue Code" means the Internal
85.28 	Revenue Code of 1986, as amended through June 15, 2003 April 15,
85.29 	2005.
85.30 	
EFFECTIVE DATE. This section is effective the day
85.31 	following final enactment.

85.32 	Sec. 2. Minnesota Statutes 2004, section 290.01,
85.33 	subdivision 19, as amended by Laws 2005, chapter 1, section 1,
85.34 	is amended to read:
85.35 		Subd. 19.Net income. The term "net income" means the
85.36 	federal taxable income, as defined in section 63 of the Internal
86.1 	Revenue Code of 1986, as amended through the date named in this
86.2 	subdivision, incorporating the federal effective dates of
86.3 	changes to the Internal Revenue Code and any elections made by
86.4 	the taxpayer in accordance with the Internal Revenue Code in
86.5 	determining federal taxable income for federal income tax
86.6 	purposes, and with the modifications provided in subdivisions
86.7 	19a to 19f.
86.8 	In the case of a regulated investment company or a fund
86.9 	thereof, as defined in section 851(a) or 851(g) of the Internal
86.10 	Revenue Code, federal taxable income means investment company
86.11 	taxable income as defined in section 852(b)(2) of the Internal
86.12 	Revenue Code, except that:
86.13 	(1) the exclusion of net capital gain provided in section
86.14 	852(b)(2)(A) of the Internal Revenue Code does not apply;
86.15 	(2) the deduction for dividends paid under section
86.16 	852(b)(2)(D) of the Internal Revenue Code must be applied by
86.17 	allowing a deduction for capital gain dividends and
86.18 	exempt-interest dividends as defined in sections 852(b)(3)(C)
86.19 	and 852(b)(5) of the Internal Revenue Code; and
86.20 	(3) the deduction for dividends paid must also be applied
86.21 	in the amount of any undistributed capital gains which the
86.22 	regulated investment company elects to have treated as provided
86.23 	in section 852(b)(3)(D) of the Internal Revenue Code.
86.24 	The net income of a real estate investment trust as defined
86.25 	and limited by section 856(a), (b), and (c) of the Internal
86.26 	Revenue Code means the real estate investment trust taxable
86.27 	income as defined in section 857(b)(2) of the Internal Revenue
86.28 	Code.
86.29 	The net income of a designated settlement fund as defined
86.30 	in section 468B(d) of the Internal Revenue Code means the gross
86.31 	income as defined in section 468B(b) of the Internal Revenue
86.32 	Code.
86.33 	The provisions of sections 1113(a), 1117, 1206(a), 1313(a),
86.34 	1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612,
86.35 	1616, 1617, 1704(l), and 1704(m) of the Small Business Job
86.36 	Protection Act, Public Law 104-188, the provisions of Public Law
87.1 	104-117, the provisions of sections 313(a) and (b)(1), 602(a),
87.2 	913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013,
87.3 	1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b)
87.4 	and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and
87.5 	1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law
87.6 	105-34, the provisions of section 6010 of the Internal Revenue
87.7 	Service Restructuring and Reform Act of 1998, Public Law
87.8 	105-206, the provisions of section 4003 of the Omnibus
87.9 	Consolidated and Emergency Supplemental Appropriations Act,
87.10 	1999, Public Law 105-277, and the provisions of section 318 of
87.11 	the Consolidated Appropriation Act of 2001, Public Law 106-554,
87.12 	shall become effective at the time they become effective for
87.13 	federal purposes.
87.14 	The Internal Revenue Code of 1986, as amended through
87.15 	December 31, 1996 April 15, 2005, shall be in effect for taxable
87.16 	years beginning after December 31, 1996.
87.17 	The provisions of sections 202(a) and (b), 221(a), 225,
87.18 	312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and
87.19 	(c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306,
87.20 	1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528,
87.21 	1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e)
87.22 	of the Taxpayer Relief Act of 1997, Public Law 105-34, the
87.23 	provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002,
87.24 	and 7003 of the Internal Revenue Service Restructuring and
87.25 	Reform Act of 1998, Public Law 105-206, the provisions of
87.26 	section 3001 of the Omnibus Consolidated and Emergency
87.27 	Supplemental Appropriations Act, 1999, Public Law 105-277, the
87.28 	provisions of section 3001 of the Miscellaneous Trade and
87.29 	Technical Corrections Act of 1999, Public Law 106-36, and the
87.30 	provisions of section 316 of the Consolidated Appropriation Act
87.31 	of 2001, Public Law 106-554, shall become effective at the time
87.32 	they become effective for federal purposes.
87.33 	The Internal Revenue Code of 1986, as amended through
87.34 	December 31, 1997, shall be in effect for taxable years
87.35 	beginning after December 31, 1997.
87.36 	The provisions of sections 5002, 6009, 6011, and 7001 of
88.1 	the Internal Revenue Service Restructuring and Reform Act of
88.2 	1998, Public Law 105-206, the provisions of section 9010 of the
88.3 	Transportation Equity Act for the 21st Century, Public Law
88.4 	105-178, the provisions of sections 1004, 4002, and 5301 of the
88.5 	Omnibus Consolidation and Emergency Supplemental Appropriations
88.6 	Act, 1999, Public Law 105-277, the provision of section 303 of
88.7 	the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law
88.8 	105-369, the provisions of sections 532, 534, 536, 537, and 538
88.9 	of the Ticket to Work and Work Incentives Improvement Act of
88.10 	1999, Public Law 106-170, the provisions of the Installment Tax
88.11 	Correction Act of 2000, Public Law 106-573, and the provisions
88.12 	of section 309 of the Consolidated Appropriation Act of 2001,
88.13 	Public Law 106-554, shall become effective at the time they
88.14 	become effective for federal purposes.
88.15 	The Internal Revenue Code of 1986, as amended through
88.16 	December 31, 1998, shall be in effect for taxable years
88.17 	beginning after December 31, 1998.
88.18 	The provisions of the FSC Repeal and Extraterritorial
88.19 	Income Exclusion Act of 2000, Public Law 106-519, and the
88.20 	provision of section 412 of the Job Creation and Worker
88.21 	Assistance Act of 2002, Public Law 107-147, shall become
88.22 	effective at the time it became effective for federal purposes.
88.23 	The Internal Revenue Code of 1986, as amended through
88.24 	December 31, 1999, shall be in effect for taxable years
88.25 	beginning after December 31, 1999.  The provisions of sections
88.26 	306 and 401 of the Consolidated Appropriation Act of 2001,
88.27 	Public Law 106-554, and the provision of section 632(b)(2)(A) of
88.28 	the Economic Growth and Tax Relief Reconciliation Act of 2001,
88.29 	Public Law 107-16, and provisions of sections 101 and 402 of the
88.30 	Job Creation and Worker Assistance Act of 2002, Public Law
88.31 	107-147, shall become effective at the same time it became
88.32 	effective for federal purposes.
88.33 	The Internal Revenue Code of 1986, as amended through
88.34 	December 31, 2000, shall be in effect for taxable years
88.35 	beginning after December 31, 2000.  The provisions of sections
88.36 	659a and 671 of the Economic Growth and Tax Relief
89.1 	Reconciliation Act of 2001, Public Law 107-16, the provisions of
89.2 	sections 104, 105, and 111 of the Victims of Terrorism Tax
89.3 	Relief Act of 2001, Public Law 107-134, and the provisions of
89.4 	sections 201, 403, 413, and 606 of the Job Creation and Worker
89.5 	Assistance Act of 2002, Public Law 107-147, shall become
89.6 	effective at the same time it became effective for federal
89.7 	purposes.
89.8 	The Internal Revenue Code of 1986, as amended through March
89.9 	15, 2002, shall be in effect for taxable years beginning after
89.10 	December 31, 2001.
89.11 	The provisions of sections 101 and 102 of the Victims of
89.12 	Terrorism Tax Relief Act of 2001, Public Law 107-134, shall
89.13 	become effective at the same time it becomes effective for
89.14 	federal purposes.
89.15 	The Internal Revenue Code of 1986, as amended through June
89.16 	15, 2003, shall be in effect for taxable years beginning after
89.17 	December 31, 2002.  The provisions of section 201 of the Jobs
89.18 	and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if
89.19 	it is enacted into law, are effective at the same time it became
89.20 	effective for federal purposes.  The provisions of the Act of
89.21 	January 7, 2005, Public Law 109-1, to accelerate the income tax
89.22 	benefits for charitable cash contributions for the relief of
89.23 	victims of the Indian Ocean tsunami, are effective at the same
89.24 	time it became effective for federal purposes and apply to the
89.25 	subtraction under subdivision 19b, clause (7).
89.26 	Except as otherwise provided, references to the Internal
89.27 	Revenue Code in subdivisions 19a 19 to 19g 19f mean the code in
89.28 	effect for purposes of determining net income for the applicable
89.29 	year.
89.30 	
EFFECTIVE DATE. This section is effective the day
89.31 	following final enactment.

89.32 	Sec. 3. Minnesota Statutes 2004, section 290.01,
89.33 	subdivision 19a, as amended by Laws 2005, chapter 151, article
89.34 	6, section 12, is amended to read:
89.35 		Subd. 19a.Additions to federal taxable income. For
89.36 	individuals, estates, and trusts, there shall be added to
90.1 	federal taxable income:
90.2 	(1)(i) interest income on obligations of any state other
90.3 	than Minnesota or a political or governmental subdivision,
90.4 	municipality, or governmental agency or instrumentality of any
90.5 	state other than Minnesota exempt from federal income taxes
90.6 	under the Internal Revenue Code or any other federal statute;
90.7 	and
90.8 	(ii) exempt-interest dividends as defined in section
90.9 	852(b)(5) of the Internal Revenue Code, except the portion of
90.10 	the exempt-interest dividends derived from interest income on
90.11 	obligations of the state of Minnesota or its political or
90.12 	governmental subdivisions, municipalities, governmental agencies
90.13 	or instrumentalities, but only if the portion of the
90.14 	exempt-interest dividends from such Minnesota sources paid to
90.15 	all shareholders represents 95 percent or more of the
90.16 	exempt-interest dividends that are paid by the regulated
90.17 	investment company as defined in section 851(a) of the Internal
90.18 	Revenue Code, or the fund of the regulated investment company as
90.19 	defined in section 851(g) of the Internal Revenue Code, making
90.20 	the payment; and
90.21 	(iii) for the purposes of items (i) and (ii), interest on
90.22 	obligations of an Indian tribal government described in section
90.23 	7871(c) of the Internal Revenue Code shall be treated as
90.24 	interest income on obligations of the state in which the tribe
90.25 	is located;
90.26 	(2) the amount of income or sales and use taxes paid or
90.27 	accrued within the taxable year under this chapter and the
90.28 	amount of taxes based on net income paid or sales and use taxes
90.29 	paid to any other state or to any province or territory of
90.30 	Canada, to the extent allowed as a deduction under section 63(d)
90.31 	of the Internal Revenue Code, but the addition may not be more
90.32 	than the amount by which the itemized deductions as allowed
90.33 	under section 63(d) of the Internal Revenue Code exceeds the
90.34 	amount of (i) the standard deduction as defined in section 63(c)
90.35 	of the Internal Revenue Code minus (ii) any addition required
90.36 	under clause (10).  For the purpose of this paragraph, the
91.1 	disallowance of itemized deductions under section 68 of the
91.2 	Internal Revenue Code of 1986, income or sales and use tax is
91.3 	the last itemized deduction disallowed;
91.4 	(3) the capital gain amount of a lump sum distribution to
91.5 	which the special tax under section 1122(h)(3)(B)(ii) of the Tax
91.6 	Reform Act of 1986, Public Law 99-514, applies;
91.7 	(4) the amount of income taxes paid or accrued within the
91.8 	taxable year under this chapter and taxes based on net income
91.9 	paid to any other state or any province or territory of Canada,
91.10 	to the extent allowed as a deduction in determining federal
91.11 	adjusted gross income.  For the purpose of this paragraph,
91.12 	income taxes do not include the taxes imposed by sections
91.13 	290.0922, subdivision 1, paragraph (b), 290.9727, 290.9728, and
91.14 	290.9729;
91.15 	(5) the amount of expense, interest, or taxes disallowed
91.16 	pursuant to section 290.10 other than expenses or interest used
91.17 	in computing net interest income for the subtraction allowed
91.18 	under subdivision 19b, clause (1);
91.19 	(6) the amount of a partner's pro rata share of net income
91.20 	which does not flow through to the partner because the
91.21 	partnership elected to pay the tax on the income under section
91.22 	6242(a)(2) of the Internal Revenue Code; and 
91.23 	(7) 80 percent of the depreciation deduction allowed under
91.24 	section 168(k) of the Internal Revenue Code.  For purposes of
91.25 	this clause, if the taxpayer has an activity that in the taxable
91.26 	year generates a deduction for depreciation under section 168(k)
91.27 	and the activity generates a loss for the taxable year that the
91.28 	taxpayer is not allowed to claim for the taxable year, "the
91.29 	depreciation allowed under section 168(k)" for the taxable year
91.30 	is limited to excess of the depreciation claimed by the activity
91.31 	under section 168(k) over the amount of the loss from the
91.32 	activity that is not allowed in the taxable year.  In succeeding
91.33 	taxable years when the losses not allowed in the taxable year
91.34 	are allowed, the depreciation under section 168(k) is allowed;
91.35 	(8) 80 percent of the amount by which the deduction allowed
91.36 	by section 179 of the Internal Revenue Code exceeds the
92.1 	deduction allowable by section 179 of the Internal Revenue Code
92.2 	of 1986, as amended through December 31, 2003;
92.3 	(9) to the extent deducted in computing federal taxable
92.4 	income, the amount of the deduction allowable under section 199
92.5 	of the Internal Revenue Code;
92.6 	(10) for tax years beginning after December 31, 2004, to
92.7 	the extent deducted in computing federal taxable income, the
92.8 	amount by which the standard deduction allowed under section
92.9 	63(c) of the Internal Revenue Code exceeds the standard
92.10 	deduction allowable under section 63(c) of the Internal Revenue
92.11 	Code of 1986, as amended through December 31, 2003; and 
92.12 	(11) the exclusion allowed under section 139A of the
92.13 	Internal Revenue Code for federal subsidies for prescription
92.14 	drug plans.
92.15 	
EFFECTIVE DATE. This section is effective for tax years
92.16 	beginning after December 31, 2004, except the changes in clause
92.17 	(2) are effective for tax years beginning after December 31,
92.18 	2003.

92.19 	Sec. 4. Minnesota Statutes 2004, section 290.01,
92.20 	subdivision 19b, as amended by Laws 2005, chapter 151, article
92.21 	6, section 13, is amended to read:
92.22 		Subd. 19b.Subtractions from federal taxable income. For
92.23 	individuals, estates, and trusts, there shall be subtracted from
92.24 	federal taxable income:
92.25 	(1) net interest income on obligations of any authority,
92.26 	commission, or instrumentality of the United States to the
92.27 	extent includable in taxable income for federal income tax
92.28 	purposes but exempt from state income tax under the laws of the
92.29 	United States;
92.30 	(2) if included in federal taxable income, the amount of
92.31 	any overpayment of income tax to Minnesota or to any other
92.32 	state, for any previous taxable year, whether the amount is
92.33 	received as a refund or as a credit to another taxable year's
92.34 	income tax liability;
92.35 	(3) the amount paid to others, less the amount used to
92.36 	claim the credit allowed under section 290.0674, not to exceed
93.1 	$1,625 for each qualifying child in grades kindergarten to 6 and
93.2 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
93.3 	textbooks, and transportation of each qualifying child in
93.4 	attending an elementary or secondary school situated in
93.5 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
93.6 	wherein a resident of this state may legally fulfill the state's
93.7 	compulsory attendance laws, which is not operated for profit,
93.8 	and which adheres to the provisions of the Civil Rights Act of
93.9 	1964 and chapter 363A.  For the purposes of this clause,
93.10 	"tuition" includes fees or tuition as defined in section
93.11 	290.0674, subdivision 1, clause (1).  As used in this clause,
93.12 	"textbooks" includes books and other instructional materials and
93.13 	equipment purchased or leased for use in elementary and
93.14 	secondary schools in teaching only those subjects legally and
93.15 	commonly taught in public elementary and secondary schools in
93.16 	this state.  Equipment expenses qualifying for deduction
93.17 	includes expenses as defined and limited in section 290.0674,
93.18 	subdivision 1, clause (3).  "Textbooks" does not include
93.19 	instructional books and materials used in the teaching of
93.20 	religious tenets, doctrines, or worship, the purpose of which is
93.21 	to instill such tenets, doctrines, or worship, nor does it
93.22 	include books or materials for, or transportation to,
93.23 	extracurricular activities including sporting events, musical or
93.24 	dramatic events, speech activities, driver's education, or
93.25 	similar programs.  For purposes of the subtraction provided by
93.26 	this clause, "qualifying child" has the meaning given in section
93.27 	32(c)(3) of the Internal Revenue Code;
93.28 	(4) income as provided under section 290.0802;
93.29 	(5) to the extent included in federal adjusted gross
93.30 	income, income realized on disposition of property exempt from
93.31 	tax under section 290.491;
93.32 	(6) to the extent not deducted in determining federal
93.33 	taxable income by an individual who does not itemize deductions
93.34 	for federal income tax purposes for the taxable year, an amount
93.35 	equal to 50 percent of the excess of charitable contributions
93.36 	over $500 allowable as a deduction for the taxable year under
94.1 	section 170(a) of the Internal Revenue Code over $500 and under
94.2 	the provisions of Public Law 109-1;
94.3 	(7) for taxable years beginning before January 1, 2008, the
94.4 	amount of the federal small ethanol producer credit allowed
94.5 	under section 40(a)(3) of the Internal Revenue Code which is
94.6 	included in gross income under section 87 of the Internal
94.7 	Revenue Code;
94.8 	(8) for individuals who are allowed a federal foreign tax
94.9 	credit for taxes that do not qualify for a credit under section
94.10 	290.06, subdivision 22, an amount equal to the carryover of
94.11 	subnational foreign taxes for the taxable year, but not to
94.12 	exceed the total subnational foreign taxes reported in claiming
94.13 	the foreign tax credit.  For purposes of this clause, "federal
94.14 	foreign tax credit" means the credit allowed under section 27 of
94.15 	the Internal Revenue Code, and "carryover of subnational foreign
94.16 	taxes" equals the carryover allowed under section 904(c) of the
94.17 	Internal Revenue Code minus national level foreign taxes to the
94.18 	extent they exceed the federal foreign tax credit;
94.19 	(9) in each of the five tax years immediately following the
94.20 	tax year in which an addition is required under subdivision 19a,
94.21 	clause (7), or 19c, clause (15), in the case of a shareholder of
94.22 	a corporation that is an S corporation, an amount equal to
94.23 	one-fifth of the delayed depreciation.  For purposes of this
94.24 	clause, "delayed depreciation" means the amount of the addition
94.25 	made by the taxpayer under subdivision 19a, clause (7), or
94.26 	subdivision 19c, clause (15), in the case of a shareholder of an
94.27 	S corporation, minus the positive value of any net operating
94.28 	loss under section 172 of the Internal Revenue Code generated
94.29 	for the tax year of the addition.  The resulting delayed
94.30 	depreciation cannot be less than zero; and 
94.31 	(10) job opportunity building zone income as provided under
94.32 	section 469.316.;
94.33 	(11) in each of the five tax years immediately following
94.34 	the tax year in which an addition is required under subdivision
94.35 	19a, clause (8), or 19c, clause (16), in the case of a
94.36 	shareholder of a corporation that is an S corporation, an amount
95.1 	equal to one-fifth of the addition made by the taxpayer under
95.2 	subdivision 19a, clause (8), or 19c, clause (16), in the case of
95.3 	a shareholder of a corporation that is an S corporation, minus
95.4 	the positive value of any net operating loss under section 172
95.5 	of the Internal Revenue Code generated for the tax year of the
95.6 	addition.  If the net operating loss exceeds the addition for
95.7 	the tax year, a subtraction is not allowed under this clause;
95.8 	and 
95.9 	(12) to the extent included in federal taxable income,
95.10 	compensation paid to a nonresident who is a service member as
95.11 	defined in United States Code, title 10, section 101(a)(5), for
95.12 	military service as defined in the Service Member Civil Relief
95.13 	Act, Public Law 108-189, section 101(2).
95.14 	
EFFECTIVE DATE. This section is effective for tax years
95.15 	beginning after December 31, 2004, except the change to clause
95.16 	(6) is effective for tax years beginning after December 31, 2003.

95.17 	Sec. 5. Minnesota Statutes 2004, section 290.01,
95.18 	subdivision 19c, as amended by Laws 2005, chapter 151, article
95.19 	6, section 14, is amended to read:
95.20 		Subd. 19c.Corporations; additions to federal taxable
95.21 	income. For corporations, there shall be added to federal
95.22 	taxable income:
95.23 	(1) the amount of any deduction taken for federal income
95.24 	tax purposes for income, excise, or franchise taxes based on net
95.25 	income or related minimum taxes, including but not limited to
95.26 	the tax imposed under section 290.0922, paid by the corporation
95.27 	to Minnesota, another state, a political subdivision of another
95.28 	state, the District of Columbia, or any foreign country or
95.29 	possession of the United States;
95.30 	(2) interest not subject to federal tax upon obligations
95.31 	of:  the United States, its possessions, its agencies, or its
95.32 	instrumentalities; the state of Minnesota or any other state,
95.33 	any of its political or governmental subdivisions, any of its
95.34 	municipalities, or any of its governmental agencies or
95.35 	instrumentalities; the District of Columbia; or Indian tribal
95.36 	governments;
96.1 	(3) exempt-interest dividends received as defined in
96.2 	section 852(b)(5) of the Internal Revenue Code;
96.3 	(4) the amount of any net operating loss deduction taken
96.4 	for federal income tax purposes under section 172 or 832(c)(10)
96.5 	of the Internal Revenue Code or operations loss deduction under
96.6 	section 810 of the Internal Revenue Code;
96.7 	(5) the amount of any special deductions taken for federal
96.8 	income tax purposes under sections 241 to 247 of the Internal
96.9 	Revenue Code;
96.10 	(6) losses from the business of mining, as defined in
96.11 	section 290.05, subdivision 1, clause (a), that are not subject
96.12 	to Minnesota income tax;
96.13 	(7) the amount of any capital losses deducted for federal
96.14 	income tax purposes under sections 1211 and 1212 of the Internal
96.15 	Revenue Code;
96.16 	(8) the exempt foreign trade income of a foreign sales
96.17 	corporation under sections 921(a) and 291 of the Internal
96.18 	Revenue Code;
96.19 	(9) the amount of percentage depletion deducted under
96.20 	sections 611 through 614 and 291 of the Internal Revenue Code;
96.21 	(10) for certified pollution control facilities placed in
96.22 	service in a taxable year beginning before December 31, 1986,
96.23 	and for which amortization deductions were elected under section
96.24 	169 of the Internal Revenue Code of 1954, as amended through
96.25 	December 31, 1985, the amount of the amortization deduction
96.26 	allowed in computing federal taxable income for those
96.27 	facilities;
96.28 	(11) the amount of any deemed dividend from a foreign
96.29 	operating corporation determined pursuant to section 290.17,
96.30 	subdivision 4, paragraph (g);
96.31 	(12) the amount of a partner's pro rata share of net income
96.32 	which does not flow through to the partner because the
96.33 	partnership elected to pay the tax on the income under section
96.34 	6242(a)(2) of the Internal Revenue Code;
96.35 	(13) the amount of net income excluded under section 114 of
96.36 	the Internal Revenue Code;
97.1 	(14) any increase in subpart F income, as defined in
97.2 	section 952(a) of the Internal Revenue Code, for the taxable
97.3 	year when subpart F income is calculated without regard to the
97.4 	provisions of section 614 of Public Law 107-147; and 
97.5 	(15) 80 percent of the depreciation deduction allowed under
97.6 	section 168(k)(1)(A) and (k)(4)(A) of the Internal Revenue
97.7 	Code.  For purposes of this clause, if the taxpayer has an
97.8 	activity that in the taxable year generates a deduction for
97.9 	depreciation under section 168(k)(1)(A) and (k)(4)(A) and the
97.10 	activity generates a loss for the taxable year that the taxpayer
97.11 	is not allowed to claim for the taxable year, "the depreciation
97.12 	allowed under section 168(k)(1)(A) and (k)(4)(A)" for the
97.13 	taxable year is limited to excess of the depreciation claimed by
97.14 	the activity under section 168(k)(1)(A) and (k)(4)(A) over the
97.15 	amount of the loss from the activity that is not allowed in the
97.16 	taxable year.  In succeeding taxable years when the losses not
97.17 	allowed in the taxable year are allowed, the depreciation under
97.18 	section 168(k)(1)(A) and (k)(4)(A) is allowed;
97.19 	(16) 80 percent of the amount by which the deduction
97.20 	allowed by section 179 of the Internal Revenue Code exceeds the
97.21 	deduction allowable by section 179 of the Internal Revenue Code
97.22 	of 1986, as amended through December 31, 2003;
97.23 	(17) to the extent deducted in computing federal taxable
97.24 	income, the amount of the deduction allowable under section 199
97.25 	of the Internal Revenue Code; and 
97.26 	(18) the exclusion allowed under section 139A of the
97.27 	Internal Revenue Code for federal subsidies for prescription
97.28 	drug plans.
97.29 	
EFFECTIVE DATE. This section is effective for tax years
97.30 	beginning after December 31, 2004.

97.31 	Sec. 6. Minnesota Statutes 2004, section 290.01,
97.32 	subdivision 19d, is amended to read:
97.33 		Subd. 19d.Corporations; modifications decreasing federal
97.34 	taxable income.  For corporations, there shall be subtracted
97.35 	from federal taxable income after the increases provided in
97.36 	subdivision 19c:
98.1 	(1) the amount of foreign dividend gross-up added to gross
98.2 	income for federal income tax purposes under section 78 of the
98.3 	Internal Revenue Code;
98.4 	(2) the amount of salary expense not allowed for federal
98.5 	income tax purposes due to claiming the federal jobs credit
98.6 	under section 51 of the Internal Revenue Code;
98.7 	(3) any dividend (not including any distribution in
98.8 	liquidation) paid within the taxable year by a national or state
98.9 	bank to the United States, or to any instrumentality of the
98.10 	United States exempt from federal income taxes, on the preferred
98.11 	stock of the bank owned by the United States or the
98.12 	instrumentality;
98.13 	(4) amounts disallowed for intangible drilling costs due to
98.14 	differences between this chapter and the Internal Revenue Code
98.15 	in taxable years beginning before January 1, 1987, as follows:
98.16 	(i) to the extent the disallowed costs are represented by
98.17 	physical property, an amount equal to the allowance for
98.18 	depreciation under Minnesota Statutes 1986, section 290.09,
98.19 	subdivision 7, subject to the modifications contained in
98.20 	subdivision 19e; and
98.21 	(ii) to the extent the disallowed costs are not represented
98.22 	by physical property, an amount equal to the allowance for cost
98.23 	depletion under Minnesota Statutes 1986, section 290.09,
98.24 	subdivision 8;
98.25 	(5) the deduction for capital losses pursuant to sections
98.26 	1211 and 1212 of the Internal Revenue Code, except that:
98.27 	(i) for capital losses incurred in taxable years beginning
98.28 	after December 31, 1986, capital loss carrybacks shall not be
98.29 	allowed;
98.30 	(ii) for capital losses incurred in taxable years beginning
98.31 	after December 31, 1986, a capital loss carryover to each of the
98.32 	15 taxable years succeeding the loss year shall be allowed;
98.33 	(iii) for capital losses incurred in taxable years
98.34 	beginning before January 1, 1987, a capital loss carryback to
98.35 	each of the three taxable years preceding the loss year, subject
98.36 	to the provisions of Minnesota Statutes 1986, section 290.16,
99.1 	shall be allowed; and
99.2 	(iv) for capital losses incurred in taxable years beginning
99.3 	before January 1, 1987, a capital loss carryover to each of the
99.4 	five taxable years succeeding the loss year to the extent such
99.5 	loss was not used in a prior taxable year and subject to the
99.6 	provisions of Minnesota Statutes 1986, section 290.16, shall be
99.7 	allowed;
99.8 	(6) an amount for interest and expenses relating to income
99.9 	not taxable for federal income tax purposes, if (i) the income
99.10 	is taxable under this chapter and (ii) the interest and expenses
99.11 	were disallowed as deductions under the provisions of section
99.12 	171(a)(2), 265 or 291 of the Internal Revenue Code in computing
99.13 	federal taxable income;
99.14 	(7) in the case of mines, oil and gas wells, other natural
99.15 	deposits, and timber for which percentage depletion was
99.16 	disallowed pursuant to subdivision 19c, clause (11), a
99.17 	reasonable allowance for depletion based on actual cost.  In the
99.18 	case of leases the deduction must be apportioned between the
99.19 	lessor and lessee in accordance with rules prescribed by the
99.20 	commissioner.  In the case of property held in trust, the
99.21 	allowable deduction must be apportioned between the income
99.22 	beneficiaries and the trustee in accordance with the pertinent
99.23 	provisions of the trust, or if there is no provision in the
99.24 	instrument, on the basis of the trust's income allocable to
99.25 	each;
99.26 	(8) for certified pollution control facilities placed in
99.27 	service in a taxable year beginning before December 31, 1986,
99.28 	and for which amortization deductions were elected under section
99.29 	169 of the Internal Revenue Code of 1954, as amended through
99.30 	December 31, 1985, an amount equal to the allowance for
99.31 	depreciation under Minnesota Statutes 1986, section 290.09,
99.32 	subdivision 7;
99.33 	(9) amounts included in federal taxable income that are due
99.34 	to refunds of income, excise, or franchise taxes based on net
99.35 	income or related minimum taxes paid by the corporation to
99.36 	Minnesota, another state, a political subdivision of another
100.1 	state, the District of Columbia, or a foreign country or
100.2 	possession of the United States to the extent that the taxes
100.3 	were added to federal taxable income under section 290.01,
100.4 	subdivision 19c, clause (1), in a prior taxable year;
100.5 	(10) 80 percent of royalties, fees, or other like income
100.6 	accrued or received from a foreign operating corporation or a
100.7 	foreign corporation which is part of the same unitary business
100.8 	as the receiving corporation;
100.9 	(11) income or gains from the business of mining as defined
100.10 	in section 290.05, subdivision 1, clause (a), that are not
100.11 	subject to Minnesota franchise tax;
100.12 	(12) the amount of handicap access expenditures in the
100.13 	taxable year which are not allowed to be deducted or capitalized
100.14 	under section 44(d)(7) of the Internal Revenue Code;
100.15 	(13) the amount of qualified research expenses not allowed
100.16 	for federal income tax purposes under section 280C(c) of the
100.17 	Internal Revenue Code, but only to the extent that the amount
100.18 	exceeds the amount of the credit allowed under section 290.068;
100.19 	(14) the amount of salary expenses not allowed for federal
100.20 	income tax purposes due to claiming the Indian employment credit
100.21 	under section 45A(a) of the Internal Revenue Code;
100.22 	(15) the amount of any refund of environmental taxes paid
100.23 	under section 59A of the Internal Revenue Code;
100.24 	(16) for taxable years beginning before January 1, 2008,
100.25 	the amount of the federal small ethanol producer credit allowed
100.26 	under section 40(a)(3) of the Internal Revenue Code which is
100.27 	included in gross income under section 87 of the Internal
100.28 	Revenue Code;
100.29 	(17) for a corporation whose foreign sales corporation, as
100.30 	defined in section 922 of the Internal Revenue Code, constituted
100.31 	a foreign operating corporation during any taxable year ending
100.32 	before January 1, 1995, and a return was filed by August 15,
100.33 	1996, claiming the deduction under section 290.21, subdivision
100.34 	4, for income received from the foreign operating corporation,
100.35 	an amount equal to 1.23 multiplied by the amount of income
100.36 	excluded under section 114 of the Internal Revenue Code,
101.1 	provided the income is not income of a foreign operating
101.2 	company;
101.3 	(18) any decrease in subpart F income, as defined in
101.4 	section 952(a) of the Internal Revenue Code, for the taxable
101.5 	year when subpart F income is calculated without regard to the
101.6 	provisions of section 614 of Public Law 107-147; and 
101.7 	(19) in each of the five tax years immediately following
101.8 	the tax year in which an addition is required under subdivision
101.9 	19c, clause (16) (15), an amount equal to one-fifth of the
101.10 	delayed depreciation.  For purposes of this clause, "delayed
101.11 	depreciation" means the amount of the addition made by the
101.12 	taxpayer under subdivision 19c, clause (16) (15).  The resulting
101.13 	delayed depreciation cannot be less than zero; and 
101.14 	(20) in each of the five tax years immediately following
101.15 	the tax year in which an addition is required under subdivision
101.16 	19c, clause (16), an amount equal to one-fifth of the amount of
101.17 	the addition.
101.18 	
EFFECTIVE DATE. This section is effective for tax years
101.19 	beginning after December 31, 2004.

101.20 	Sec. 7. Minnesota Statutes 2004, section 290.01,
101.21 	subdivision 31, is amended to read:
101.22 		Subd. 31.Internal revenue code.  Unless specifically
101.23 	defined otherwise, "Internal Revenue Code" means the Internal
101.24 	Revenue Code of 1986, as amended through June 15, 2003 April 15,
101.25 	2005.
101.26 	
EFFECTIVE DATE. This section is effective the day
101.27 	following final enactment except the changes incorporated by
101.28 	federal changes are effective at the same times as the changes
101.29 	were effective for federal purposes.

101.30 	Sec. 8. Minnesota Statutes 2004, section 290.032,
101.31 	subdivision 1, is amended to read:
101.32 		Subdivision 1.Imposition.  There is hereby imposed as an
101.33 	addition to the annual income tax for a taxable year of a
101.34 	taxpayer in the classes described in section 290.03 a tax with
101.35 	respect to any distribution received by such taxpayer that is
101.36 	treated as a lump sum distribution under section 402(d) of the
102.1 	Internal Revenue Code 1401(c)(2) of the Small Business Job
102.2 	Protection Act, Public Law 104-188 and that is subject to tax
102.3 	for such taxable year under section 402(d) of the Internal
102.4 	Revenue Code 1401(c)(2) of the Small Business Job Protection
102.5 	Act, Public Law 104-188.
102.6 	
EFFECTIVE DATE. This section is effective for tax years
102.7 	beginning after December 31, 1999.

102.8 	Sec. 9. Minnesota Statutes 2004, section 290.032,
102.9 	subdivision 2, is amended to read:
102.10 		Subd. 2.Computation.  The amount of tax imposed by
102.11 	subdivision 1 shall be computed in the same way as the tax
102.12 	imposed under section 402(d) of the Internal Revenue Code of
102.13 	1986, as amended through December 31, 1995, except that the
102.14 	initial separate tax shall be an amount equal to five times the
102.15 	tax which would be imposed by section 290.06, subdivision 2c, if
102.16 	the recipient was an unmarried individual, and the taxable net
102.17 	income was an amount equal to one-fifth of the excess of
102.18 	(i) the total taxable amount of the lump sum distribution
102.19 	for the year, over
102.20 	(ii) the minimum distribution allowance, and except that
102.21 	references in section 402(d) of the Internal Revenue Code of
102.22 	1986, as amended through December 31, 1995,to paragraph (1)(A)
102.23 	thereof shall instead be references to subdivision 1, and the
102.24 	excess, if any, of the subtraction base amount over federal
102.25 	taxable income for a qualified individual as provided under
102.26 	section 290.0802, subdivision 2.
102.27 	
EFFECTIVE DATE. This section is effective for tax years
102.28 	beginning after December 31, 1999.

102.29 	Sec. 10. Minnesota Statutes 2004, section 290.06,
102.30 	subdivision 2c, is amended to read:
102.31 		Subd. 2c.Schedules of rates for individuals, estates,
102.32 	and trusts.  (a) The income taxes imposed by this chapter upon
102.33 	married individuals filing joint returns and surviving spouses
102.34 	as defined in section 2(a) of the Internal Revenue Code must be
102.35 	computed by applying to their taxable net income the following
102.36 	schedule of rates:
103.1 	(1) On the first $25,680, 5.35 percent;
103.2 	(2) On all over $25,680, but not over $102,030, 7.05
103.3 	percent;
103.4 	(3) On all over $102,030, 7.85 percent.
103.5 	Married individuals filing separate returns, estates, and
103.6 	trusts must compute their income tax by applying the above rates
103.7 	to their taxable income, except that the income brackets will be
103.8 	one-half of the above amounts.
103.9 	(b) The income taxes imposed by this chapter upon unmarried
103.10 	individuals must be computed by applying to taxable net income
103.11 	the following schedule of rates:
103.12 	(1) On the first $17,570, 5.35 percent;
103.13 	(2) On all over $17,570, but not over $57,710, 7.05
103.14 	percent;
103.15 	(3) On all over $57,710, 7.85 percent.
103.16 	(c) The income taxes imposed by this chapter upon unmarried
103.17 	individuals qualifying as a head of household as defined in
103.18 	section 2(b) of the Internal Revenue Code must be computed by
103.19 	applying to taxable net income the following schedule of rates:
103.20 	(1) On the first $21,630, 5.35 percent;
103.21 	(2) On all over $21,630, but not over $86,910, 7.05
103.22 	percent;
103.23 	(3) On all over $86,910, 7.85 percent.
103.24 	(d) In lieu of a tax computed according to the rates set
103.25 	forth in this subdivision, the tax of any individual taxpayer
103.26 	whose taxable net income for the taxable year is less than an
103.27 	amount determined by the commissioner must be computed in
103.28 	accordance with tables prepared and issued by the commissioner
103.29 	of revenue based on income brackets of not more than $100.  The
103.30 	amount of tax for each bracket shall be computed at the rates
103.31 	set forth in this subdivision, provided that the commissioner
103.32 	may disregard a fractional part of a dollar unless it amounts to
103.33 	50 cents or more, in which case it may be increased to $1.
103.34 	(e) An individual who is not a Minnesota resident for the
103.35 	entire year must compute the individual's Minnesota income tax
103.36 	as provided in this subdivision.  After the application of the
104.1 	nonrefundable credits provided in this chapter, the tax
104.2 	liability must then be multiplied by a fraction in which:
104.3 	(1) the numerator is the individual's Minnesota source
104.4 	federal adjusted gross income as defined in section 62 of the
104.5 	Internal Revenue Code and increased by the additions required
104.6 	under section 290.01, subdivision 19a, clauses (1), (5), and 
104.7 	(6), (7), (8), and (9),and reduced by the subtraction under
104.8 	section 290.01, subdivision 19b, clause (11), and the Minnesota
104.9 	assignable portion of the subtraction for United States
104.10 	government interest under section 290.01, subdivision 19b,
104.11 	clause (1), and the subtractions under section 290.01,
104.12 	subdivision 19b, clauses (9), (10), (11), and (12),after
104.13 	applying the allocation and assignability provisions of section
104.14 	290.081, clause (a), or 290.17; and
104.15 	(2) the denominator is the individual's federal adjusted
104.16 	gross income as defined in section 62 of the Internal Revenue
104.17 	Code of 1986, increased by the amounts specified in section
104.18 	290.01, subdivision 19a, clauses (1), (5), and (6), (7), (8),
104.19 	and (9),and reduced by the amounts specified in section 290.01,
104.20 	subdivision 19b, clauses (1) and , (9), (10),(11), and (12).
104.21 	
EFFECTIVE DATE. This section is effective for tax years
104.22 	beginning after December 31, 2004.

104.23 	Sec. 11. Minnesota Statutes 2004, section 290.067,
104.24 	subdivision 1, is amended to read:
104.25 		Subdivision 1.Amount of credit.  (a) A taxpayer may take
104.26 	as a credit against the tax due from the taxpayer and a spouse,
104.27 	if any, under this chapter an amount equal to the dependent care
104.28 	credit for which the taxpayer is eligible pursuant to the
104.29 	provisions of section 21 of the Internal Revenue Code subject to
104.30 	the limitations provided in subdivision 2 except that in
104.31 	determining whether the child qualified as a dependent, income
104.32 	received as a Minnesota family investment program grant or
104.33 	allowance to or on behalf of the child must not be taken into
104.34 	account in determining whether the child received more than half
104.35 	of the child's support from the taxpayer, and the provisions of
104.36 	section 32(b)(1)(D) of the Internal Revenue Code do not apply.
105.1 	(b) If a child who has not attained the age of six years at
105.2 	the close of the taxable year is cared for at a licensed family
105.3 	day care home operated by the child's parent, the taxpayer is
105.4 	deemed to have paid employment-related expenses.  If the child
105.5 	is 16 months old or younger at the close of the taxable year,
105.6 	the amount of expenses deemed to have been paid equals the
105.7 	maximum limit for one qualified individual under section 21(c)
105.8 	and (d) of the Internal Revenue Code.  If the child is older
105.9 	than 16 months of age but has not attained the age of six years
105.10 	at the close of the taxable year, the amount of expenses deemed
105.11 	to have been paid equals the amount the licensee would charge
105.12 	for the care of a child of the same age for the same number of
105.13 	hours of care.
105.14 	(c) If a married couple:
105.15 	(1) has a child who has not attained the age of one year at
105.16 	the close of the taxable year;
105.17 	(2) files a joint tax return for the taxable year; and
105.18 	(3) does not participate in a dependent care assistance
105.19 	program as defined in section 129 of the Internal Revenue Code,
105.20 	in lieu of the actual employment related expenses paid for that
105.21 	child under paragraph (a) or the deemed amount under paragraph
105.22 	(b), the lesser of (i) the combined earned income of the couple
105.23 	or (ii) the amount of the maximum limit for one qualified
105.24 	individual under section 21(c) and (d) of the Internal Revenue
105.25 	Code will be deemed to be the employment related expense paid
105.26 	for that child.  The earned income limitation of section 21(d)
105.27 	of the Internal Revenue Code shall not apply to this deemed
105.28 	amount.  These deemed amounts apply regardless of whether any
105.29 	employment-related expenses have been paid.
105.30 	(d) If the taxpayer is not required and does not file a
105.31 	federal individual income tax return for the tax year, no credit
105.32 	is allowed for any amount paid to any person unless:
105.33 	(1) the name, address, and taxpayer identification number
105.34 	of the person are included on the return claiming the credit; or
105.35 	(2) if the person is an organization described in section
105.36 	501(c)(3) of the Internal Revenue Code and exempt from tax under
106.1 	section 501(a) of the Internal Revenue Code, the name and
106.2 	address of the person are included on the return claiming the
106.3 	credit.
106.4 	In the case of a failure to provide the information required
106.5 	under the preceding sentence, the preceding sentence does not
106.6 	apply if it is shown that the taxpayer exercised due diligence
106.7 	in attempting to provide the information required.
106.8 	In the case of a nonresident, part-year resident, or a
106.9 	person who has earned income not subject to tax under this
106.10 	chapter including earned income excluded pursuant to section
106.11 	290.01, subdivision 19b, clause (11) (10), the credit determined
106.12 	under section 21 of the Internal Revenue Code must be allocated
106.13 	based on the ratio by which the earned income of the claimant
106.14 	and the claimant's spouse from Minnesota sources bears to the
106.15 	total earned income of the claimant and the claimant's spouse.
106.16 	For residents of Minnesota, the exclusion of combat pay
106.17 	under section 112 of the Internal Revenue Code is not considered
106.18 	"earned income not subject to tax under this chapter." 
106.19 	
EFFECTIVE DATE. This section is effective for tax years
106.20 	beginning after December 31, 2003.

106.21 	Sec. 12. Minnesota Statutes 2004, section 290.067,
106.22 	subdivision 2a, is amended to read:
106.23 		Subd. 2a.Income.  (a) For purposes of this section,
106.24 	"income" means the sum of the following:
106.25 	(1) federal adjusted gross income as defined in section 62
106.26 	of the Internal Revenue Code; and
106.27 	(2) the sum of the following amounts to the extent not
106.28 	included in clause (1):
106.29 	(i) all nontaxable income;
106.30 	(ii) the amount of a passive activity loss that is not
106.31 	disallowed as a result of section 469, paragraph (i) or (m) of
106.32 	the Internal Revenue Code and the amount of passive activity
106.33 	loss carryover allowed under section 469(b) of the Internal
106.34 	Revenue Code;
106.35 	(iii) an amount equal to the total of any discharge of
106.36 	qualified farm indebtedness of a solvent individual excluded
107.1 	from gross income under section 108(g) of the Internal Revenue
107.2 	Code;
107.3 	(iv) cash public assistance and relief;
107.4 	(v) any pension or annuity (including railroad retirement
107.5 	benefits, all payments received under the federal Social
107.6 	Security Act, supplemental security income, and veterans
107.7 	benefits), which was not exclusively funded by the claimant or
107.8 	spouse, or which was funded exclusively by the claimant or
107.9 	spouse and which funding payments were excluded from federal
107.10 	adjusted gross income in the years when the payments were made;
107.11 	(vi) interest received from the federal or a state
107.12 	government or any instrumentality or political subdivision
107.13 	thereof;
107.14 	(vii) workers' compensation;
107.15 	(viii) nontaxable strike benefits;
107.16 	(ix) the gross amounts of payments received in the nature
107.17 	of disability income or sick pay as a result of accident,
107.18 	sickness, or other disability, whether funded through insurance
107.19 	or otherwise;
107.20 	(x) a lump sum distribution under section 402(e)(3) of the
107.21 	Internal Revenue Code of 1986, as amended through December 31,
107.22 	1995;
107.23 	(xi) contributions made by the claimant to an individual
107.24 	retirement account, including a qualified voluntary employee
107.25 	contribution; simplified employee pension plan; self-employed
107.26 	retirement plan; cash or deferred arrangement plan under section
107.27 	401(k) of the Internal Revenue Code; or deferred compensation
107.28 	plan under section 457 of the Internal Revenue Code; and 
107.29 	(xii) nontaxable scholarship or fellowship grants;
107.30 	(xiii) the amount of deduction allowed under section 199 of
107.31 	the Internal Revenue Code; and 
107.32 	(xiv) the amount of deduction allowed under section 220 or
107.33 	223 of the Internal Revenue Code.
107.34 	In the case of an individual who files an income tax return
107.35 	on a fiscal year basis, the term "federal adjusted gross income"
107.36 	means federal adjusted gross income reflected in the fiscal year
108.1 	ending in the next calendar year.  Federal adjusted gross income
108.2 	may not be reduced by the amount of a net operating loss
108.3 	carryback or carryforward or a capital loss carryback or
108.4 	carryforward allowed for the year.
108.5 	(b) "Income" does not include:
108.6 	(1) amounts excluded pursuant to the Internal Revenue Code,
108.7 	sections 101(a) and 102;
108.8 	(2) amounts of any pension or annuity that were exclusively
108.9 	funded by the claimant or spouse if the funding payments were
108.10 	not excluded from federal adjusted gross income in the years
108.11 	when the payments were made;
108.12 	(3) surplus food or other relief in kind supplied by a
108.13 	governmental agency;
108.14 	(4) relief granted under chapter 290A;
108.15 	(5) child support payments received under a temporary or
108.16 	final decree of dissolution or legal separation; and
108.17 	(6) restitution payments received by eligible individuals
108.18 	and excludable interest as defined in section 803 of the
108.19 	Economic Growth and Tax Relief Reconciliation Act of 2001,
108.20 	Public Law 107-16.
108.21 	
EFFECTIVE DATE. This section is effective for tax years
108.22 	beginning after December 31, 2003.

108.23 	Sec. 13. Minnesota Statutes 2004, section 290.0671,
108.24 	subdivision 1, is amended to read:
108.25 		Subdivision 1.Credit allowed.  (a) An individual is
108.26 	allowed a credit against the tax imposed by this chapter equal
108.27 	to a percentage of earned income.  To receive a credit, a
108.28 	taxpayer must be eligible for a credit under section 32 of the
108.29 	Internal Revenue Code.
108.30 	(b) For individuals with no qualifying children, the credit
108.31 	equals 1.9125 percent of the first $4,620 of earned income.  The
108.32 	credit is reduced by 1.9125 percent of earned income or modified
108.33 	adjusted gross income, whichever is greater, in excess of
108.34 	$5,770, but in no case is the credit less than zero.
108.35 	(c) For individuals with one qualifying child, the credit
108.36 	equals 8.5 percent of the first $6,920 of earned income and 8.5
109.1 	percent of earned income over $12,080 but less than $13,450.
109.2 	The credit is reduced by 5.73 percent of earned income or
109.3 	modified adjusted gross income, whichever is greater, in excess
109.4 	of $15,080, but in no case is the credit less than zero.
109.5 	(d) For individuals with two or more qualifying children,
109.6 	the credit equals ten percent of the first $9,720 of earned
109.7 	income and 20 percent of earned income over $14,860 but less
109.8 	than $16,800.  The credit is reduced by 10.3 percent of earned
109.9 	income or modified adjusted gross income, whichever is greater,
109.10 	in excess of $17,890, but in no case is the credit less than
109.11 	zero.
109.12 	(e) For a nonresident or part-year resident, the credit
109.13 	must be allocated based on the percentage calculated under
109.14 	section 290.06, subdivision 2c, paragraph (e).
109.15 	(f) For a person who was a resident for the entire tax year
109.16 	and has earned income not subject to tax under this chapter,
109.17 	including income excluded under section 290.01, subdivision 19b,
109.18 	clause (11) (10), the credit must be allocated based on the
109.19 	ratio of federal adjusted gross income reduced by the earned
109.20 	income not subject to tax under this chapter over federal
109.21 	adjusted gross income. For the purposes of this paragraph, the
109.22 	exclusion of combat pay under section 112 of the Internal
109.23 	Revenue Code is not considered "earned income not subject to tax
109.24 	under this chapter." 
109.25 	(g) For tax years beginning after December 31, 2001, and
109.26 	before December 31, 2004, the $5,770 in paragraph (b), the
109.27 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
109.28 	after being adjusted for inflation under subdivision 7, are each
109.29 	increased by $1,000 for married taxpayers filing joint returns.
109.30 	(h) For tax years beginning after December 31, 2004, and
109.31 	before December 31, 2007, the $5,770 in paragraph (b), the
109.32 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
109.33 	after being adjusted for inflation under subdivision 7, are each
109.34 	increased by $2,000 for married taxpayers filing joint returns.
109.35 	(i) For tax years beginning after December 31, 2007, and
109.36 	before December 31, 2010, the $5,770 in paragraph (b), the
110.1 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
110.2 	after being adjusted for inflation under subdivision 7, are each
110.3 	increased by $3,000 for married taxpayers filing joint returns.
110.4 	For tax years beginning after December 31, 2008, the $3,000 is
110.5 	adjusted annually for inflation under subdivision 7.
110.6 	(j) The commissioner shall construct tables showing the
110.7 	amount of the credit at various income levels and make them
110.8 	available to taxpayers.  The tables shall follow the schedule
110.9 	contained in this subdivision, except that the commissioner may
110.10 	graduate the transition between income brackets.
110.11 	
EFFECTIVE DATE. This section is effective for tax years
110.12 	beginning after December 31, 2003.

110.13 	Sec. 14. Minnesota Statutes 2004, section 290.0675,
110.14 	subdivision 1, is amended to read:
110.15 		Subdivision 1.Definitions.  (a) For purposes of this
110.16 	section the following terms have the meanings given.
110.17 	(b) "Earned income" means the sum of the following, to the
110.18 	extent included in Minnesota taxable income:
110.19 	(1) earned income as defined in section 32(c)(2) of the
110.20 	Internal Revenue Code;
110.21 	(2) income received from a retirement pension,
110.22 	profit-sharing, stock bonus, or annuity plan; and
110.23 	(3) Social Security benefits as defined in section 86(d)(1)
110.24 	of the Internal Revenue Code.
110.25 	(c) "Taxable income" means net income as defined in section
110.26 	290.01, subdivision 19.
110.27 	(d) "Earned income of lesser-earning spouse" means the
110.28 	earned income of the spouse with the lesser amount of earned
110.29 	income as defined in paragraph (b) for the taxable year minus
110.30 	the sum of (i) the amount for one exemption under section 151(d)
110.31 	of the Internal Revenue Code and (ii) one-half the amount of the
110.32 	standard deduction under section 63(c)(2)(A) and (4) of the
110.33 	Internal Revenue Code minus one-half of any addition required
110.34 	under section 290.01, subdivision 19a, clause (10).
110.35 	
EFFECTIVE DATE. This section is effective for tax years
110.36 	beginning after December 31, 2004.

111.1 	Sec. 15. Minnesota Statutes 2004, section 290.091,
111.2 	subdivision 2, is amended to read:
111.3 		Subd. 2.Definitions.  For purposes of the tax imposed by
111.4 	this section, the following terms have the meanings given:
111.5 	(a) "Alternative minimum taxable income" means the sum of
111.6 	the following for the taxable year:
111.7 	(1) the taxpayer's federal alternative minimum taxable
111.8 	income as defined in section 55(b)(2) of the Internal Revenue
111.9 	Code;
111.10 	(2) the taxpayer's itemized deductions allowed in computing
111.11 	federal alternative minimum taxable income, but excluding:
111.12 	(i) the charitable contribution deduction under section 170
111.13 	of the Internal Revenue Code to the extent that the deduction
111.14 	exceeds 1.0 percent of adjusted gross income, as defined in
111.15 	section 62 of the Internal Revenue Code;
111.16 	(ii) the medical expense deduction;
111.17 	(iii) the casualty, theft, and disaster loss deduction; and
111.18 	(iv) the impairment-related work expenses of a disabled
111.19 	person;
111.20 	(3) for depletion allowances computed under section 613A(c)
111.21 	of the Internal Revenue Code, with respect to each property (as
111.22 	defined in section 614 of the Internal Revenue Code), to the
111.23 	extent not included in federal alternative minimum taxable
111.24 	income, the excess of the deduction for depletion allowable
111.25 	under section 611 of the Internal Revenue Code for the taxable
111.26 	year over the adjusted basis of the property at the end of the
111.27 	taxable year (determined without regard to the depletion
111.28 	deduction for the taxable year);
111.29 	(4) to the extent not included in federal alternative
111.30 	minimum taxable income, the amount of the tax preference for
111.31 	intangible drilling cost under section 57(a)(2) of the Internal
111.32 	Revenue Code determined without regard to subparagraph (E);
111.33 	(5) to the extent not included in federal alternative
111.34 	minimum taxable income, the amount of interest income as
111.35 	provided by section 290.01, subdivision 19a, clause (1); and
111.36 	(6) the amount of addition required by section 290.01,
112.1 	subdivision 19a, clause clauses (7), (8), and (9);
112.2 	less the sum of the amounts determined under the following:
112.3 	(1) interest income as defined in section 290.01,
112.4 	subdivision 19b, clause (1);
112.5 	(2) an overpayment of state income tax as provided by
112.6 	section 290.01, subdivision 19b, clause (2), to the extent
112.7 	included in federal alternative minimum taxable income;
112.8 	(3) the amount of investment interest paid or accrued
112.9 	within the taxable year on indebtedness to the extent that the
112.10 	amount does not exceed net investment income, as defined in
112.11 	section 163(d)(4) of the Internal Revenue Code.  Interest does
112.12 	not include amounts deducted in computing federal adjusted gross
112.13 	income; and
112.14 	(4) amounts subtracted from federal taxable income as
112.15 	provided by section 290.01, subdivision 19b, clauses
112.16 	(9),(10) and ,(11), and (12).
112.17 	In the case of an estate or trust, alternative minimum
112.18 	taxable income must be computed as provided in section 59(c) of
112.19 	the Internal Revenue Code.
112.20 	(b) "Investment interest" means investment interest as
112.21 	defined in section 163(d)(3) of the Internal Revenue Code.
112.22 	(c) "Tentative minimum tax" equals 6.4 percent of
112.23 	alternative minimum taxable income after subtracting the
112.24 	exemption amount determined under subdivision 3.
112.25 	(d) "Regular tax" means the tax that would be imposed under
112.26 	this chapter (without regard to this section and section
112.27 	290.032), reduced by the sum of the nonrefundable credits
112.28 	allowed under this chapter.
112.29 	(e) "Net minimum tax" means the minimum tax imposed by this
112.30 	section.
112.31 	
EFFECTIVE DATE. This section is effective for tax years
112.32 	beginning after December 31, 2004.

112.33 	Sec. 16. Minnesota Statutes 2004, section 290A.03,
112.34 	subdivision 3, is amended to read:
112.35 		Subd. 3.Income.  (1) "Income" means the sum of the
112.36 	following:
113.1 	(a) federal adjusted gross income as defined in the
113.2 	Internal Revenue Code; and
113.3 	(b) the sum of the following amounts to the extent not
113.4 	included in clause (a):
113.5 	(i) all nontaxable income;
113.6 	(ii) the amount of a passive activity loss that is not
113.7 	disallowed as a result of section 469, paragraph (i) or (m) of
113.8 	the Internal Revenue Code and the amount of passive activity
113.9 	loss carryover allowed under section 469(b) of the Internal
113.10 	Revenue Code;
113.11 	(iii) an amount equal to the total of any discharge of
113.12 	qualified farm indebtedness of a solvent individual excluded
113.13 	from gross income under section 108(g) of the Internal Revenue
113.14 	Code;
113.15 	(iv) cash public assistance and relief;
113.16 	(v) any pension or annuity (including railroad retirement
113.17 	benefits, all payments received under the federal Social
113.18 	Security Act, supplemental security income, and veterans
113.19 	benefits), which was not exclusively funded by the claimant or
113.20 	spouse, or which was funded exclusively by the claimant or
113.21 	spouse and which funding payments were excluded from federal
113.22 	adjusted gross income in the years when the payments were made;
113.23 	(vi) interest received from the federal or a state
113.24 	government or any instrumentality or political subdivision
113.25 	thereof;
113.26 	(vii) workers' compensation;
113.27 	(viii) nontaxable strike benefits;
113.28 	(ix) the gross amounts of payments received in the nature
113.29 	of disability income or sick pay as a result of accident,
113.30 	sickness, or other disability, whether funded through insurance
113.31 	or otherwise;
113.32 	(x) a lump sum distribution under section 402(e)(3) of the
113.33 	Internal Revenue Code of 1986, as amended through December 31,
113.34 	1995;
113.35 	(xi) contributions made by the claimant to an individual
113.36 	retirement account, including a qualified voluntary employee
114.1 	contribution; simplified employee pension plan; self-employed
114.2 	retirement plan; cash or deferred arrangement plan under section
114.3 	401(k) of the Internal Revenue Code; or deferred compensation
114.4 	plan under section 457 of the Internal Revenue Code; and 
114.5 	(xii) nontaxable scholarship or fellowship grants;
114.6 	(xiii) the amount of deduction allowed under section 199 of
114.7 	the Internal Revenue Code; and 
114.8 	(xiv) the amount of deduction allowed under section 220 or
114.9 	223 of the Internal Revenue Code.
114.10 	In the case of an individual who files an income tax return
114.11 	on a fiscal year basis, the term "federal adjusted gross income"
114.12 	shall mean federal adjusted gross income reflected in the fiscal
114.13 	year ending in the calendar year.  Federal adjusted gross income
114.14 	shall not be reduced by the amount of a net operating loss
114.15 	carryback or carryforward or a capital loss carryback or
114.16 	carryforward allowed for the year.
114.17 	(2) "Income" does not include:
114.18 	(a) amounts excluded pursuant to the Internal Revenue Code,
114.19 	sections 101(a) and 102;
114.20 	(b) amounts of any pension or annuity which was exclusively
114.21 	funded by the claimant or spouse and which funding payments were
114.22 	not excluded from federal adjusted gross income in the years
114.23 	when the payments were made;
114.24 	(c) surplus food or other relief in kind supplied by a
114.25 	governmental agency;
114.26 	(d) relief granted under this chapter;
114.27 	(e) child support payments received under a temporary or
114.28 	final decree of dissolution or legal separation; or
114.29 	(f) restitution payments received by eligible individuals
114.30 	and excludable interest as defined in section 803 of the
114.31 	Economic Growth and Tax Relief Reconciliation Act of 2001,
114.32 	Public Law 107-16.
114.33 	(3) The sum of the following amounts may be subtracted from
114.34 	income:
114.35 	(a) for the claimant's first dependent, the exemption
114.36 	amount multiplied by 1.4;
115.1 	(b) for the claimant's second dependent, the exemption
115.2 	amount multiplied by 1.3;
115.3 	(c) for the claimant's third dependent, the exemption
115.4 	amount multiplied by 1.2;
115.5 	(d) for the claimant's fourth dependent, the exemption
115.6 	amount multiplied by 1.1;
115.7 	(e) for the claimant's fifth dependent, the exemption
115.8 	amount; and
115.9 	(f) if the claimant or claimant's spouse was disabled or
115.10 	attained the age of 65 on or before December 31 of the year for
115.11 	which the taxes were levied or rent paid, the exemption amount.
115.12 	For purposes of this subdivision, the "exemption amount"
115.13 	means the exemption amount under section 151(d) of the Internal
115.14 	Revenue Code for the taxable year for which the income is
115.15 	reported.
115.16 	
EFFECTIVE DATE. This section is effective for property
115.17 	tax refunds based on household income for 2004 and thereafter.

115.18 	Sec. 17. Minnesota Statutes 2004, section 290A.03,
115.19 	subdivision 15, is amended to read:
115.20 		Subd. 15.Internal revenue code.  "Internal Revenue Code"
115.21 	means the Internal Revenue Code of 1986, as amended through June
115.22 	15, 2003 April 15, 2005.
115.23 	
EFFECTIVE DATE. This section is effective for property
115.24 	tax refunds based on property taxes payable on or after December
115.25 	31, 2004, and rent paid on or after December 31, 2003.

115.26 	ARTICLE 5
115.27 	SALES AND USE TAXES

115.28 	Section 1. Minnesota Statutes 2004, section 16C.03, is
115.29 	amended by adding a subdivision to read:
115.30 		Subd. 18.Contracts with foreign vendors. (a) The
115.31 	commissioner and other agencies to which this section applies
115.32 	and the legislative branch of government shall, subject to
115.33 	paragraph (d), cancel a contract for goods or services from a
115.34 	vendor or an affiliate of a vendor or suspend or debar a vendor
115.35 	or an affiliate of a vendor from future contracts upon
115.36 	notification from the commissioner of revenue that the vendor or
116.1 	an affiliate of the vendor has not registered to collect the
116.2 	sales and use tax imposed under chapter 297A on its sales in
116.3 	Minnesota or to a destination in Minnesota.  This subdivision
116.4 	shall not apply to state colleges and universities, the courts,
116.5 	and any agency in the judicial branch of government.  For
116.6 	purposes of this subdivision, the term "affiliate" means any
116.7 	person or entity that is controlled by, or is under common
116.8 	control of, a vendor through stock ownership or other
116.9 	affiliation.
116.10 	(b) Beginning January 1, 2006, each vendor or affiliate of
116.11 	a vendor selling goods or services, subject to tax under chapter
116.12 	297A, to an agency or the legislature must provide its Minnesota
116.13 	sales and use tax business identification number, upon request,
116.14 	to show that the vendor is registered to collect Minnesota sales
116.15 	or use tax.
116.16 	(c) The commissioner of revenue shall periodically provide
116.17 	to the commissioner and the legislative branch a list of vendors
116.18 	who have not registered to collect Minnesota sales and use tax
116.19 	and who are subject to being suspended or debarred as vendors or
116.20 	having their contracts canceled.
116.21 	(d) The provisions of this subdivision may be waived by the
116.22 	commissioner or the legislative branch when the vendor is the
116.23 	single source of such goods or services, in the event of an
116.24 	emergency, or when it is in the best interests of the state as
116.25 	determined by the commissioner in consultation with the
116.26 	commissioner of revenue.  Such consultation is not a disclosure
116.27 	violation under chapter 270B.
116.28 	
EFFECTIVE DATE. This section is effective for all
116.29 	contracts entered into after December 31, 2005.

116.30 	Sec. 2. Minnesota Statutes 2004, section 289A.11,
116.31 	subdivision 1, is amended to read:
116.32 		Subdivision 1.Return required.  Except as provided in
116.33 	section 289A.18, subdivision 4, for the month in which taxes
116.34 	imposed by chapter 297A are payable, or for which a return is
116.35 	due, a return for the preceding reporting period must be filed
116.36 	with the commissioner in the form and manner the commissioner
117.1 	prescribes.  A person making sales at retail at two or more
117.2 	places of business may file a consolidated return subject to
117.3 	rules prescribed by the commissioner.  In computing the dollar
117.4 	amount of items on the return, the amounts are rounded off to
117.5 	the nearest whole dollar, disregarding amounts less than 50
117.6 	cents and increasing amounts of 50 cents to 99 cents to the next
117.7 	highest dollar.
117.8 	Notwithstanding this subdivision, a person who is not
117.9 	required to hold a sales tax permit under chapter 297A and who
117.10 	makes annual purchases, for use in a trade or business,of less
117.11 	than $18,500, or a person who is not required to hold a sales
117.12 	tax permit and who makes purchases for personal use,that are
117.13 	subject to the use tax imposed by section 297A.63, may file an
117.14 	annual use tax return on a form prescribed by the commissioner.
117.15 	If a person who qualifies for an annual use tax reporting period
117.16 	is required to obtain a sales tax permit or makes use tax
117.17 	purchases, for use in a trade or business,in excess of $18,500
117.18 	during the calendar year, the reporting period must be
117.19 	considered ended at the end of the month in which the permit is
117.20 	applied for or the purchase in excess of $18,500 is made and a
117.21 	return must be filed for the preceding reporting period.
117.22 	
EFFECTIVE DATE. This section is effective for returns
117.23 	filed after December 31, 2005.

117.24 	Sec. 3. Minnesota Statutes 2004, section 297A.61,
117.25 	subdivision 3, as amended by Laws 2005, chapter 151, article 7,
117.26 	section 6, is amended to read:
117.27 		Subd. 3.Sale and purchase. (a) "Sale" and "purchase"
117.28 	include, but are not limited to, each of the transactions listed
117.29 	in this subdivision.
117.30 	(b) Sale and purchase include:
117.31 	(1) any transfer of title or possession, or both, of
117.32 	tangible personal property, whether absolutely or conditionally,
117.33 	for a consideration in money or by exchange or barter; and
117.34 	(2) the leasing of or the granting of a license to use or
117.35 	consume, for a consideration in money or by exchange or barter,
117.36 	tangible personal property, other than a manufactured home used
118.1 	for residential purposes for a continuous period of 30 days or
118.2 	more.
118.3 	(c) Sale and purchase include the production, fabrication,
118.4 	printing, or processing of tangible personal property for a
118.5 	consideration for consumers who furnish either directly or
118.6 	indirectly the materials used in the production, fabrication,
118.7 	printing, or processing.
118.8 	(d) Sale and purchase include the preparing for a
118.9 	consideration of food.  Notwithstanding section 297A.67,
118.10 	subdivision 2, taxable food includes, but is not limited to, the
118.11 	following:
118.12 	(1) prepared food sold by the retailer;
118.13 	(2) soft drinks;
118.14 	(3) candy;
118.15 	(4) dietary supplements; and
118.16 	(5) all food sold through vending machines.
118.17 	(e) A sale and a purchase includes the furnishing for a
118.18 	consideration of electricity, gas, water, or steam for use or
118.19 	consumption within this state.
118.20 	(f) A sale and a purchase includes the transfer for a
118.21 	consideration of prewritten computer software whether delivered
118.22 	electronically, by load and leave, or otherwise.
118.23 	(g) A sale and a purchase includes the furnishing for a
118.24 	consideration of the following services:
118.25 	(1) the privilege of admission to places of amusement,
118.26 	recreational areas, or athletic events, and the making available
118.27 	of amusement devices, tanning facilities, reducing salons, steam
118.28 	baths, turkish baths, health clubs, and spas or athletic
118.29 	facilities;
118.30 	(2) lodging and related services by a hotel, rooming house,
118.31 	resort, campground, motel, or trailer camp and the granting of
118.32 	any similar license to use real property in a specific facility,
118.33 	other than the renting or leasing of it for a continuous period
118.34 	of 30 days or more under an enforceable written agreement that
118.35 	may not be terminated without prior notice;
118.36 	(3) nonresidential parking services, whether on a
119.1 	contractual, hourly, or other periodic basis, except for parking
119.2 	at a meter;
119.3 	(4) the granting of membership in a club, association, or
119.4 	other organization if:
119.5 	(i) the club, association, or other organization makes
119.6 	available for the use of its members sports and athletic
119.7 	facilities, without regard to whether a separate charge is
119.8 	assessed for use of the facilities; and
119.9 	(ii) use of the sports and athletic facility is not made
119.10 	available to the general public on the same basis as it is made
119.11 	available to members.
119.12 	Granting of membership means both onetime initiation fees and
119.13 	periodic membership dues.  Sports and athletic facilities
119.14 	include golf courses; tennis, racquetball, handball, and squash
119.15 	courts; basketball and volleyball facilities; running tracks;
119.16 	exercise equipment; swimming pools; and other similar athletic
119.17 	or sports facilities;
119.18 	(5) delivery of aggregate materials and concrete block by a
119.19 	third party if the delivery would be subject to the sales tax if
119.20 	provided by the seller of the aggregate material or concrete
119.21 	block; and
119.22 	(6) services as provided in this clause:
119.23 	(i) laundry and dry cleaning services including cleaning,
119.24 	pressing, repairing, altering, and storing clothes, linen
119.25 	services and supply, cleaning and blocking hats, and carpet,
119.26 	drapery, upholstery, and industrial cleaning.  Laundry and dry
119.27 	cleaning services do not include services provided by coin
119.28 	operated facilities operated by the customer;
119.29 	(ii) motor vehicle washing, waxing, and cleaning services,
119.30 	including services provided by coin operated facilities operated
119.31 	by the customer, and rustproofing, undercoating, and towing of
119.32 	motor vehicles;
119.33 	(iii) building and residential cleaning, maintenance, and
119.34 	disinfecting and exterminating services;
119.35 	(iv) detective, security, burglar, fire alarm, and armored
119.36 	car services; but not including services performed within the
120.1 	jurisdiction they serve by off-duty licensed peace officers as
120.2 	defined in section 626.84, subdivision 1, or services provided
120.3 	by a nonprofit organization for monitoring and electronic
120.4 	surveillance of persons placed on in-home detention pursuant to
120.5 	court order or under the direction of the Minnesota Department
120.6 	of Corrections;
120.7 	(v) pet grooming services;
120.8 	(vi) lawn care, fertilizing, mowing, spraying and sprigging
120.9 	services; garden planting and maintenance; tree, bush, and shrub
120.10 	pruning, bracing, spraying, and surgery; indoor plant care;
120.11 	tree, bush, shrub, and stump removal, except when performed as
120.12 	part of a land clearing contract as defined in section 297A.68,
120.13 	subdivision 40; and tree trimming for public utility lines.
120.14 	Services performed under a construction contract for the
120.15 	installation of shrubbery, plants, sod, trees, bushes, and
120.16 	similar items are not taxable;
120.17 	(vii) massages, except when provided by a licensed health
120.18 	care facility or professional or upon written referral from a
120.19 	licensed health care facility or professional for treatment of
120.20 	illness, injury, or disease; and
120.21 	(viii) the furnishing of lodging, board, and care services
120.22 	for animals in kennels and other similar arrangements, but
120.23 	excluding veterinary and horse boarding services.
120.24 	In applying the provisions of this chapter, the terms
120.25 	"tangible personal property" and "sales at retail" include
120.26 	taxable services listed in clause (6), items (i) to (vi) and
120.27 	(viii), and the provision of these taxable services, unless
120.28 	specifically provided otherwise.  Services performed by an
120.29 	employee for an employer are not taxable.  Services performed by
120.30 	a partnership or association for another partnership or
120.31 	association are not taxable if one of the entities owns or
120.32 	controls more than 80 percent of the voting power of the equity
120.33 	interest in the other entity.  Services performed between
120.34 	members of an affiliated group of corporations are not taxable.
120.35 	For purposes of the preceding sentence, "affiliated group of
120.36 	corporations" includes those entities that would be classified
121.1 	as members of an affiliated group under United States Code,
121.2 	title 26, section 1504, and that are eligible to file a
121.3 	consolidated tax return for federal income tax purposes.
121.4 	(h) A sale and a purchase includes the furnishing for a
121.5 	consideration of tangible personal property or taxable services
121.6 	by the United States or any of its agencies or
121.7 	instrumentalities, or the state of Minnesota, its agencies,
121.8 	instrumentalities, or political subdivisions.
121.9 	(i) A sale and a purchase includes the furnishing for a
121.10 	consideration of telecommunications services, including cable
121.11 	television services and direct satellite services.
121.12 	Telecommunications services are taxed to the extent allowed
121.13 	under federal law.
121.14 	(j) A sale and a purchase includes the furnishing for a
121.15 	consideration of installation if the installation charges would
121.16 	be subject to the sales tax if the installation were provided by
121.17 	the seller of the item being installed.
121.18 	(k) A sale and a purchase includes the rental of a vehicle
121.19 	by a motor vehicle dealer to a customer when (1) the vehicle is
121.20 	rented by the customer for a consideration, or (2) the motor
121.21 	vehicle dealer is reimbursed pursuant to a service contract as
121.22 	defined in section 65B.29, subdivision 1, clause (1).
121.23 	
EFFECTIVE DATE. This section is effective for sales and
121.24 	purchases made after October 28, 2002, but for land clearing
121.25 	contracts entered into after October 28, 2002, no refunds may be
121.26 	claimed under Minnesota Statutes, section 289A.50, for sales
121.27 	taxes collected and remitted to the state on the land clearing
121.28 	contracts.

121.29 	Sec. 4. Minnesota Statutes 2004, section 297A.61,
121.30 	subdivision 4, as amended by Laws 2005, chapter 151, article 7,
121.31 	section 7, is amended to read:
121.32 		Subd. 4.Retail sale. (a) A "retail sale" means any
121.33 	sale, lease, or rental for any purpose, other than resale,
121.34 	sublease, or subrent of items by the purchaser in the normal
121.35 	course of business as defined in subdivision 21.
121.36 	(b) A sale of property used by the owner only by leasing it
122.1 	to others or by holding it in an effort to lease it, and put to
122.2 	no use by the owner other than resale after the lease or effort
122.3 	to lease, is a sale of property for resale.
122.4 	(c) A sale of master computer software that is purchased
122.5 	and used to make copies for sale or lease is a sale of property
122.6 	for resale.
122.7 	(d) A sale of building materials, supplies, and equipment
122.8 	to owners, contractors, subcontractors, or builders for the
122.9 	erection of buildings or the alteration, repair, or improvement
122.10 	of real property is a retail sale in whatever quantity sold,
122.11 	whether the sale is for purposes of resale in the form of real
122.12 	property or otherwise.
122.13 	(e) A sale of carpeting, linoleum, or similar floor
122.14 	covering to a person who provides for installation of the floor
122.15 	covering is a retail sale and not a sale for resale since a sale
122.16 	of floor covering which includes installation is a contract for
122.17 	the improvement of real property.
122.18 	(f) A sale of shrubbery, plants, sod, trees, and similar
122.19 	items to a person who provides for installation of the items is
122.20 	a retail sale and not a sale for resale since a sale of
122.21 	shrubbery, plants, sod, trees, and similar items that includes
122.22 	installation is a contract for the improvement of real property.
122.23 	(g) A sale of tangible personal property that is awarded as
122.24 	prizes is a retail sale and is not considered a sale of property
122.25 	for resale.
122.26 	(h) A sale of tangible personal property utilized or
122.27 	employed in the furnishing or providing of services under
122.28 	subdivision 3, paragraph (g), clause (1), including, but not
122.29 	limited to, property given as promotional items, is a retail
122.30 	sale and is not considered a sale of property for resale.
122.31 	(i) A sale of tangible personal property used in conducting
122.32 	lawful gambling under chapter 349 or the state lottery under
122.33 	chapter 349A, including, but not limited to, property given as
122.34 	promotional items, is a retail sale and is not considered a sale
122.35 	of property for resale.
122.36 	(j) A sale of machines, equipment, or devices that are used
123.1 	to furnish, provide, or dispense goods or services, including,
123.2 	but not limited to, coin-operated devices, is a retail sale and
123.3 	is not considered a sale of property for resale.
123.4 	(k) In the case of a lease, a retail sale occurs (1) when
123.5 	an obligation to make a lease payment becomes due under the
123.6 	terms of the agreement or the trade practices of the lessor or
123.7 	(2) in the case of a lease of a motor vehicle, as defined in
123.8 	section 297B.01, subdivision 5, but excluding vehicles with a
123.9 	manufacturer's gross vehicle weight rating greater than 10,000
123.10 	pounds and rentals of vehicles for not more than 28 days, at the
123.11 	time the lease is executed.
123.12 	(l) In the case of a conditional sales contract, a retail
123.13 	sale occurs upon the transfer of title or possession of the
123.14 	tangible personal property.
123.15 	
EFFECTIVE DATE. This section is effective for leases
123.16 	entered into after September 30, 2005.

123.17 	Sec. 5. Minnesota Statutes 2004, section 297A.67,
123.18 	subdivision 6, is amended to read:
123.19 		Subd. 6.Other exempt meals. (a) Meals or drinks
123.20 	purchased for and served exclusively to individuals who are 60
123.21 	years of age or over and their spouses or to handicapped persons
123.22 	and their spouses by governmental agencies, nonprofit
123.23 	organizations, or churches, or pursuant to any program funded in
123.24 	whole or in part through United States Code, title 42, sections
123.25 	3001 through 3045, wherever delivered, prepared, or served, are
123.26 	exempt.
123.27 	(b) Meals or drinks purchased for and served exclusively to
123.28 	children who are less than 14 years of age or disabled children
123.29 	who are less than 16 years of age and who are attending a child
123.30 	care or early childhood education program, are exempt if they
123.31 	are:
123.32 	(1) purchased by a nonprofit child care facility that is
123.33 	exempt under section 297A.70, subdivision 4, and that primarily
123.34 	serves families with income of 250 percent or less of federal
123.35 	poverty guidelines; and 
123.36 	(2) prepared at the site of the child care facility.
124.1 	
EFFECTIVE DATE. This section is effective for sales after
124.2 	December 31, 1997.

124.3 	Sec. 6. Minnesota Statutes 2004, section 297A.67,
124.4 	subdivision 29, is amended to read:
124.5 		Subd. 29.solar energy efficient products. (a) A
124.6 	residential lighting fixture or a compact fluorescent bulb is
124.7 	exempt if it has an energy star label.
124.8 	(b) The following products are exempt if they have an
124.9 	energyguide label that indicates that the product meets or
124.10 	exceeds the standards listed below:
124.11 	(1) an electric heat pump hot water heater with an energy
124.12 	factor of at least 1.9;
124.13 	(2) a natural gas water heater with an energy factor of at
124.14 	least 0.62;
124.15 	(3) a propane gas or fuel oil water heater with an energy
124.16 	factor of at least 0.62;
124.17 	(4) a natural gas furnace with an annual fuel utilization
124.18 	efficiency greater than 92 percent; and 
124.19 	(5) a propane gas or fuel oil furnace with an annual fuel
124.20 	utilization efficiency greater than 92 percent.
124.21 	(c) A photovoltaic device solar energy system, as defined
124.22 	in section 216C.06, subdivision 17,is exempt. For purposes of
124.23 	this subdivision, "photovoltaic device" means a solid-state
124.24 	electrical device, such as a solar module, that converts light
124.25 	directly into direct current electricity of voltage-current
124.26 	characteristics that are a function of the characteristics of
124.27 	the light source and the materials in and design of the device.
124.28 	A "solar module" is a photovoltaic device that produces a
124.29 	specified power output under defined test conditions, usually
124.30 	composed of groups of solar cells connected in series, in
124.31 	parallel, or in series-parallel combinations.
124.32 	(d) For purposes of this subdivision, "energy star label"
124.33 	means the label granted to certain products that meet United
124.34 	States Environmental Protection Agency and United States
124.35 	Department of Energy criteria for energy efficiency.  For
124.36 	purposes of this subdivision, "energyguide label" means the
125.1 	label that the United States Federal Trade Commissioner requires
125.2 	manufacturers to apply to certain appliances under United States
125.3 	Code, title 16, part 305.
125.4 	
EFFECTIVE DATE. This section is effective for sales and
125.5 	purchases made on or after August 1, 2005.

125.6 	Sec. 7. Minnesota Statutes 2004, section 297A.67, is
125.7 	amended by adding a subdivision to read:
125.8 		Subd. 32.Cigarettes. Cigarettes upon which a tax has
125.9 	been imposed under section 297F.25 are exempt.
125.10 	
EFFECTIVE DATE. This section is effective for sales and
125.11 	purchases made after July 31, 2005.

125.12 	Sec. 8. Minnesota Statutes 2004, section 297A.68,
125.13 	subdivision 2, as amended by Laws 2005, chapter 151, article 7,
125.14 	section 14, is amended to read:
125.15 		Subd. 2.Materials consumed in industrial production.
 125.16 	(a) Materials stored, used, or consumed in industrial production
125.17 	of personal property intended to be sold ultimately at retail
125.18 	are exempt, whether or not the item so used becomes an
125.19 	ingredient or constituent part of the property produced.
125.20 	Materials that qualify for this exemption include, but are not
125.21 	limited to, the following:
125.22 	(1) chemicals, including chemicals used for cleaning food
125.23 	processing machinery and equipment;
125.24 	(2) materials, including chemicals, fuels, and electricity
125.25 	purchased by persons engaged in industrial production to treat
125.26 	waste generated as a result of the production process;
125.27 	(3) fuels, electricity, gas, and steam used or consumed in
125.28 	the production process, except that electricity, gas, or steam
125.29 	used for space heating, cooling, or lighting is exempt if (i) it
125.30 	is in excess of the average climate control or lighting for the
125.31 	production area, and (ii) it is necessary to produce that
125.32 	particular product;
125.33 	(4) petroleum products and lubricants;
125.34 	(5) packaging materials, including returnable containers
125.35 	used in packaging food and beverage products;
125.36 	(6) accessory tools, equipment, and other items that are
126.1 	separate detachable units with an ordinary useful life of less
126.2 	than 12 months used in producing a direct effect upon the
126.3 	product; and
126.4 	(7) the following materials, tools, and equipment used in
126.5 	metalcasting:  crucibles, thermocouple protection sheaths and
126.6 	tubes, stalk tubes, refractory materials, molten metal filters
126.7 	and filter boxes, degassing lances, and base blocks.
126.8 	(b) This exemption does not include:
126.9 	(1) machinery, equipment, implements, tools, accessories,
126.10 	appliances, contrivances and furniture and fixtures, except
126.11 	those listed in paragraph (a), clause (6); and
126.12 	(2) petroleum and special fuels used in producing or
126.13 	generating power for propelling ready-mixed concrete trucks on
126.14 	the public highways of this state.
126.15 	(c) Industrial production includes, but is not limited to,
126.16 	research, development, design or production of any tangible
126.17 	personal property, manufacturing, processing (other than by
126.18 	restaurants and consumers) of agricultural products (whether
126.19 	vegetable or animal), commercial fishing, refining, smelting,
126.20 	reducing, brewing, distilling, printing, mining, quarrying,
126.21 	lumbering, generating electricity, the production of road
126.22 	building materials, and the research, development, design, or
126.23 	production of computer software.  Industrial production does not
126.24 	include painting, cleaning, repairing or similar processing of
126.25 	property except as part of the original manufacturing process.
126.26 	(d) Industrial production does not include:
126.27 	(1) the furnishing of services listed in section 297A.61,
126.28 	subdivision 3, paragraph (g), clause (6), items (i) to (vi) and
126.29 	(viii); or 
126.30 	(2) the transportation, transmission, or distribution of
126.31 	petroleum, liquefied gas, natural gas, water, or steam, in, by,
126.32 	or through pipes, lines, tanks, mains, or other means of
126.33 	transporting those products.  For purposes of this paragraph,
126.34 	"transportation, transmission, or distribution" does not include
126.35 	blending of petroleum or biodiesel fuel as defined in section
126.36 	239.77.
127.1 	
EFFECTIVE DATE. This section is effective for sales and
127.2 	purchases made after July 31, 2005.

127.3 	Sec. 9. Minnesota Statutes 2004, section 297A.68,
127.4 	subdivision 5, as amended by Laws 2005, chapter 151, article 7,
127.5 	section 15, is amended to read:
127.6 		Subd. 5.Capital equipment. (a) Capital equipment is
127.7 	exempt.  The tax must be imposed and collected as if the rate
127.8 	under section 297A.62, subdivision 1, applied, and then refunded
127.9 	in the manner provided in section 297A.75.
127.10 	"Capital equipment" means machinery and equipment purchased
127.11 	or leased, and used in this state by the purchaser or lessee
127.12 	primarily for manufacturing, fabricating, mining, or refining
127.13 	tangible personal property to be sold ultimately at retail if
127.14 	the machinery and equipment are essential to the integrated
127.15 	production process of manufacturing, fabricating, mining, or
127.16 	refining.  Capital equipment also includes machinery and
127.17 	equipment used primarily to electronically transmit results
127.18 	retrieved by a customer of an on-line computerized data
127.19 	retrieval system.
127.20 	(b) Capital equipment includes, but is not limited to:
127.21 	(1) machinery and equipment used to operate, control, or
127.22 	regulate the production equipment;
127.23 	(2) machinery and equipment used for research and
127.24 	development, design, quality control, and testing activities;
127.25 	(3) environmental control devices that are used to maintain
127.26 	conditions such as temperature, humidity, light, or air pressure
127.27 	when those conditions are essential to and are part of the
127.28 	production process;
127.29 	(4) materials and supplies used to construct and install
127.30 	machinery or equipment;
127.31 	(5) repair and replacement parts, including accessories,
127.32 	whether purchased as spare parts, repair parts, or as upgrades
127.33 	or modifications to machinery or equipment;
127.34 	(6) materials used for foundations that support machinery
127.35 	or equipment;
127.36 	(7) materials used to construct and install special purpose
128.1 	buildings used in the production process;
128.2 	(8) ready-mixed concrete equipment in which the ready-mixed
128.3 	concrete is mixed as part of the delivery process regardless if
128.4 	mounted on a chassis, repair parts for ready-mixed concrete
128.5 	trucks, and leases of ready-mixed concrete trucks; and
128.6 	(9) machinery or equipment used for research, development,
128.7 	design, or production of computer software.
128.8 	(c) Capital equipment does not include the following:
128.9 	(1) motor vehicles taxed under chapter 297B;
128.10 	(2) machinery or equipment used to receive or store raw
128.11 	materials;
128.12 	(3) building materials, except for materials included in
128.13 	paragraph (b), clauses (6) and (7);
128.14 	(4) machinery or equipment used for nonproduction purposes,
128.15 	including, but not limited to, the following:  plant security,
128.16 	fire prevention, first aid, and hospital stations; support
128.17 	operations or administration; pollution control; and plant
128.18 	cleaning, disposal of scrap and waste, plant communications,
128.19 	space heating, cooling, lighting, or safety;
128.20 	(5) farm machinery and aquaculture production equipment as
128.21 	defined by section 297A.61, subdivisions 12 and 13;
128.22 	(6) machinery or equipment purchased and installed by a
128.23 	contractor as part of an improvement to real property;
128.24 	(7) machinery and equipment used by restaurants in the
128.25 	furnishing, preparing, or serving of prepared foods as defined
128.26 	in section 297A.61, subdivision 31;
128.27 	(8) machinery and equipment used to furnish the services
128.28 	listed in section 297A.61, subdivision 3, paragraph (g), clause
128.29 	(6), items (i) to (vi) and (viii); or 
128.30 	(9) machinery or equipment used in the transportation,
128.31 	transmission, or distribution of petroleum, liquefied gas,
128.32 	natural gas, water, or steam, in, by, or through pipes, lines,
128.33 	tanks, mains, or other means of transporting those products.
128.34 	This clause does not apply to machinery or equipment used to
128.35 	blend petroleum or biodiesel fuel as defined in section 239.77;
128.36 	or 
129.1 	(10) any other item that is not essential to the integrated
129.2 	process of manufacturing, fabricating, mining, or refining.
129.3 	(d) For purposes of this subdivision:
129.4 	(1) "Equipment" means independent devices or tools separate
129.5 	from machinery but essential to an integrated production
129.6 	process, including computers and computer software, used in
129.7 	operating, controlling, or regulating machinery and equipment;
129.8 	and any subunit or assembly comprising a component of any
129.9 	machinery or accessory or attachment parts of machinery, such as
129.10 	tools, dies, jigs, patterns, and molds.
129.11 	(2) "Fabricating" means to make, build, create, produce, or
129.12 	assemble components or property to work in a new or different
129.13 	manner.
129.14 	(3) "Integrated production process" means a process or
129.15 	series of operations through which tangible personal property is
129.16 	manufactured, fabricated, mined, or refined.  For purposes of
129.17 	this clause, (i) manufacturing begins with the removal of raw
129.18 	materials from inventory and ends when the last process prior to
129.19 	loading for shipment has been completed; (ii) fabricating begins
129.20 	with the removal from storage or inventory of the property to be
129.21 	assembled, processed, altered, or modified and ends with the
129.22 	creation or production of the new or changed product; (iii)
129.23 	mining begins with the removal of overburden from the site of
129.24 	the ores, minerals, stone, peat deposit, or surface materials
129.25 	and ends when the last process before stockpiling is completed;
129.26 	and (iv) refining begins with the removal from inventory or
129.27 	storage of a natural resource and ends with the conversion of
129.28 	the item to its completed form.
129.29 	(4) "Machinery" means mechanical, electronic, or electrical
129.30 	devices, including computers and computer software, that are
129.31 	purchased or constructed to be used for the activities set forth
129.32 	in paragraph (a), beginning with the removal of raw materials
129.33 	from inventory through completion of the product, including
129.34 	packaging of the product.
129.35 	(5) "Machinery and equipment used for pollution control"
129.36 	means machinery and equipment used solely to eliminate, prevent,
130.1 	or reduce pollution resulting from an activity described in
130.2 	paragraph (a).
130.3 	(6) "Manufacturing" means an operation or series of
130.4 	operations where raw materials are changed in form, composition,
130.5 	or condition by machinery and equipment and which results in the
130.6 	production of a new article of tangible personal property.  For
130.7 	purposes of this subdivision, "manufacturing" includes the
130.8 	generation of electricity or steam to be sold at retail.
130.9 	(7) "Mining" means the extraction of minerals, ores, stone,
130.10 	or peat.
130.11 	(8) "On-line data retrieval system" means a system whose
130.12 	cumulation of information is equally available and accessible to
130.13 	all its customers.
130.14 	(9) "Primarily" means machinery and equipment used 50
130.15 	percent or more of the time in an activity described in
130.16 	paragraph (a).
130.17 	(10) "Refining" means the process of converting a natural
130.18 	resource to an intermediate or finished product, including the
130.19 	treatment of water to be sold at retail.
130.20 	(11) This subdivision does not apply to telecommunications
130.21 	equipment as provided in subdivision 35, and does not apply to
130.22 	wire, cable, fiber, poles, or conduit for telecommunications
130.23 	services.
130.24 	
EFFECTIVE DATE. This section is effective for sales and
130.25 	purchases made after July 31, 2005.

130.26 	Sec. 10. Minnesota Statutes 2004, section 297A.68,
130.27 	subdivision 35, is amended to read:
130.28 		Subd. 35.Telecommunications equipment.  (a)
130.29 	Telecommunications machinery and equipment purchased or leased
130.30 	for use directly by a telecommunications service provider
130.31 	primarily in the provision of telecommunications services that
130.32 	are ultimately to be sold at retail are exempt, regardless of
130.33 	whether purchased by the owner, a contractor, or a subcontractor.
130.34 	(b) For purposes of this subdivision, "telecommunications
130.35 	machinery and equipment" includes, but is not limited to:
130.36 	(1) machinery, equipment, and fixtures utilized in
131.1 	receiving, initiating, amplifying, processing, transmitting,
131.2 	retransmitting, recording, switching, or monitoring
131.3 	telecommunications services, such as computers, transformers,
131.4 	amplifiers, routers, bridges, repeaters, multiplexers, and other
131.5 	items performing comparable functions;
131.6 	(2) machinery, equipment, and fixtures used in the
131.7 	transportation of telecommunications services, radio
131.8 	transmitters and receivers, satellite equipment, microwave
131.9 	equipment, and other transporting media, but not wire, cable,
131.10 	fiber, poles, or conduit;
131.11 	(3) ancillary machinery, equipment, and fixtures that
131.12 	regulate, control, protect, or enable the machinery in clauses
131.13 	(1) and (2) to accomplish its intended function, such as
131.14 	auxiliary power supply, test equipment, towers, heating,
131.15 	ventilating, and air conditioning equipment necessary to the
131.16 	operation of the telecommunications equipment; and software
131.17 	necessary to the operation of the telecommunications equipment;
131.18 	and
131.19 	(4) repair and replacement parts, including accessories,
131.20 	whether purchased as spare parts, repair parts, or as upgrades
131.21 	or modifications to qualified machinery or equipment.
131.22 	(c) For purposes of this subdivision, "telecommunications
131.23 	services" means telecommunications services as defined in
131.24 	section 297A.61, subdivision 24, paragraph paragraphs (a), only 
131.25 	(c), and (d).
131.26 	
EFFECTIVE DATE. This section is effective the day
131.27 	following final enactment.

131.28 	Sec. 11. Minnesota Statutes 2004, section 297A.68, is
131.29 	amended by adding a subdivision to read:
131.30 		Subd. 40.Land clearing. Tree, bush, shrub, and stump
131.31 	removal are exempt when sold to contractors or subcontractors as
131.32 	part of a land clearing contract.  For purposes of this
131.33 	subdivision, "land clearing contract" means a contract for the
131.34 	removal of trees, bushes, and shrubs, including the removal of
131.35 	roots and stumps, to develop a site.  This exemption does not
131.36 	apply to land clearing of a portion of a site to allow for
132.1 	remodeling, improvement, or expansion of an existing structure.
132.2 	
EFFECTIVE DATE. This section is effective for sales and
132.3 	purchases made after October 28, 2002, but for land clearing
132.4 	contracts entered into after October 28, 2002, no refunds may be
132.5 	claimed under Minnesota Statutes, section 289A.50, for sales
132.6 	taxes collected and remitted to the state on the land clearing
132.7 	contracts.

132.8 	Sec. 12. Minnesota Statutes 2004, section 297A.70,
132.9 	subdivision 8, is amended to read:
132.10 		Subd. 8.Regionwide public safety radio communication
132.11 	system; products and services.  Products and services including,
132.12 	but not limited to, end user equipment used for construction,
132.13 	ownership, operation, maintenance, and enhancement of the
132.14 	backbone system of the regionwide public safety radio
132.15 	communication system established under sections 403.21 to
132.16 	403.34, are exempt.  For purposes of this subdivision, backbone
132.17 	system is defined in section 403.21, subdivision 9.  This
132.18 	subdivision is effective for purchases, sales, storage, use, or
132.19 	consumption occurring before August 1, 2005, in the counties of
132.20 	Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and
132.21 	Washington for use in the first and second phases of the system,
132.22 	as defined in section 403.21, subdivisions 3, 10, and 11, and
132.23 	that portion of the third phase of the system that is located in
132.24 	the southeast district of the State Patrol and the counties of
132.25 	Benton, Sherburne, Stearns, and Wright.
132.26 	
EFFECTIVE DATE. This section is effective for sales after
132.27 	April 30, 2005.

132.28 	Sec. 13. Minnesota Statutes 2004, section 297A.70,
132.29 	subdivision 10, is amended to read:
132.30 		Subd. 10.Nonprofit tickets or admissions.  (a) Tickets
132.31 	or admissions to an event are exempt if all the gross receipts
132.32 	are recorded as such, in accordance with generally accepted
132.33 	accounting principles, on the books of one or more organizations
132.34 	whose primary mission is to provide an opportunity for citizens
132.35 	of the state to participate in the creation, performance, or
132.36 	appreciation of the arts, and provided that each organization is:
133.1 	(1) an organization described in section 501(c)(3) of the
133.2 	Internal Revenue Code in which voluntary contributions make up
133.3 	at least the following percent of the organization's annual
133.4 	revenue in its most recently completed 12-month fiscal year, or
133.5 	in the current year if the organization has not completed a
133.6 	12-month fiscal year:
133.7 	(i) for sales made after July 31, 2001, and before July 1,
133.8 	2002, for the organization's fiscal year completed in calendar
133.9 	year 2000, three percent;
133.10 	(ii) for sales made on or after July 1, 2002, and on or
133.11 	before June 30, 2003, for the organization's fiscal year
133.12 	completed in calendar year 2001, three percent;
133.13 	(iii) for sales made on or after July 1, 2003, and on or
133.14 	before June 30, 2004, for the organization's fiscal year
133.15 	completed in calendar year 2002, four percent; and
133.16 	(iv) for sales made in each 12-month period, beginning on
133.17 	July 1, 2004, and each subsequent year, for the organization's
133.18 	fiscal year completed in the preceding calendar year, five
133.19 	percent;
133.20 	(2) a municipal board that promotes cultural and arts
133.21 	activities; or
133.22 	(3) the University of Minnesota, a state college and
133.23 	university, or a private nonprofit college or university 
133.24 	provided that the event is held at a university-owned facility
133.25 	owned by the educational institution holding the event.
133.26 	The exemption only applies if the entire proceeds, after
133.27 	reasonable expenses, are used solely to provide opportunities
133.28 	for citizens of the state to participate in the creation,
133.29 	performance, or appreciation of the arts.
133.30 	(b) Tickets or admissions to the premises of the Minnesota
133.31 	Zoological Garden are exempt, provided that the exemption under
133.32 	this paragraph does not apply to tickets or admissions to
133.33 	performances or events held on the premises unless the
133.34 	performance or event is sponsored and conducted exclusively by
133.35 	the Minnesota Zoological Board or employees of the Minnesota
133.36 	Zoological Garden.
134.1 	
EFFECTIVE DATE. This section is effective for tickets and
134.2 	admissions to events held on or after August 1, 2005, but does
134.3 	not apply to events for which sales of tickets or admissions
134.4 	were made prior to August 1, 2005.

134.5 	Sec. 14. Minnesota Statutes 2004, section 297A.71, is
134.6 	amended by adding a subdivision to read:
134.7 		Subd. 33.Hydroelectric generating facility. Materials
134.8 	and supplies used or consumed in the construction of a
134.9 	hydroelectric generating facility that meets the requirements of
134.10 	this subdivision are exempt.  To qualify for the exemption under
134.11 	this subdivision, a hydroelectric generating facility must:
134.12 	(1) utilize two turbine generators at a dam site existing
134.13 	on March 31, 1994;
134.14 	(2) be located on land within 1,500 feet of a 13.8 kilovolt
134.15 	distribution circuit; and 
134.16 	(3) be eligible to receive a renewable energy production
134.17 	incentive payment under section 216C.41.
134.18 	
EFFECTIVE DATE. This section is effective for sales made
134.19 	after December 31, 2004, and on or before December 31, 2007.

134.20 	Sec. 15. Minnesota Statutes 2004, section 297A.71, is
134.21 	amended by adding a subdivision to read:
134.22 		Subd. 34.Waste recovery facility. Materials and
134.23 	supplies used or consumed in, and equipment incorporated into,
134.24 	the construction, improvement, or expansion of a waste-to-energy
134.25 	resource recovery facility are exempt if the facility uses
134.26 	biomass or mixed municipal solid waste as a primary fuel to
134.27 	generate steam or electricity.
134.28 	
EFFECTIVE DATE. This section is effective for sales and
134.29 	purchases made after July 31, 2005.

134.30 	Sec. 16. Minnesota Statutes 2004, section 297A.71, is
134.31 	amended by adding a subdivision to read:
134.32 		Subd. 35.Municipal utilities. Materials and supplies
134.33 	used or consumed in, and equipment incorporated into, the
134.34 	construction, improvement, or expansion of electric generation
134.35 	and related facilities used pursuant to a joint power purchase
134.36 	agreement to meet the biomass energy mandate in section
135.1 	216B.2424 are exempt if the owner or owners of the facilities
135.2 	are a municipal electric utility or utilities or a joint venture
135.3 	of municipal electric utilities.  The tax must be imposed and
135.4 	collected as if the rate under section 297A.62, subdivision 1,
135.5 	applied and then refunded under section 297A.75.
135.6 	
EFFECTIVE DATE. This section is effective for sales and
135.7 	purchases made after December 31, 2004.

135.8 	Sec. 17. Minnesota Statutes 2004, section 297A.71, is
135.9 	amended by adding a subdivision to read:
135.10 		Subd. 36.Chatfield wastewater treatment
135.11 	facility. Materials and supplies used in and equipment
135.12 	incorporated into the construction, improvement, or expansion of
135.13 	a wastewater treatment facility owned by the city of Chatfield
135.14 	are exempt.  This exemption is effective for purchases made
135.15 	before December 31, 2007.
135.16 	
EFFECTIVE DATE. This section is effective for sales and
135.17 	purchases made on or after July 31, 2005.

135.18 	Sec. 18. Minnesota Statutes 2004, section 297A.75,
135.19 	subdivision 1, as amended by Laws 2005, chapter 151, article 7,
135.20 	section 19, is amended to read:
135.21 		Subdivision 1.Tax collected. The tax on the gross
135.22 	receipts from the sale of the following exempt items must be
135.23 	imposed and collected as if the sale were taxable and the rate
135.24 	under section 297A.62, subdivision 1, applied.  The exempt items
135.25 	include:
135.26 	(1) capital equipment exempt under section 297A.68,
135.27 	subdivision 5;
135.28 	(2) building materials for an agricultural processing
135.29 	facility exempt under section 297A.71, subdivision 13;
135.30 	(3) building materials for mineral production facilities
135.31 	exempt under section 297A.71, subdivision 14;
135.32 	(4) building materials for correctional facilities under
135.33 	section 297A.71, subdivision 3;
135.34 	(5) building materials used in a residence for disabled
135.35 	veterans exempt under section 297A.71, subdivision 11;
135.36 	(6) elevators and building materials exempt under section
136.1 	297A.71, subdivision 12;
136.2 	(7) building materials for the Long Lake Conservation
136.3 	Center exempt under section 297A.71, subdivision 17;
136.4 	(8) materials, supplies, fixtures, furnishings, and
136.5 	equipment for a county law enforcement and family service center
136.6 	under section 297A.71, subdivision 26; and 
136.7 	(9) materials and supplies for qualified low-income housing
136.8 	under section 297A.71, subdivision 23; and 
136.9 	(10) materials, supplies, and equipment for municipal
136.10 	electric utility facilities under section 297A.71, subdivision
136.11 	35.
136.12 	
EFFECTIVE DATE. This section is effective for purchases
136.13 	made after December 31, 2004.

136.14 	Sec. 19. Minnesota Statutes 2004, section 297A.75,
136.15 	subdivision 2, is amended to read:
136.16 		Subd. 2.Refund; eligible persons.  Upon application on
136.17 	forms prescribed by the commissioner, a refund equal to the tax
136.18 	paid on the gross receipts of the exempt items must be paid to
136.19 	the applicant.  Only the following persons may apply for the
136.20 	refund:
136.21 	(1) for subdivision 1, clauses (1) to (3), the applicant
136.22 	must be the purchaser;
136.23 	(2) for subdivision 1, clauses (4), (7), and (8), the
136.24 	applicant must be the governmental subdivision;
136.25 	(3) for subdivision 1, clause (5), the applicant must be
136.26 	the recipient of the benefits provided in United States Code,
136.27 	title 38, chapter 21;
136.28 	(4) for subdivision 1, clause (6), the applicant must be
136.29 	the owner of the homestead property; and 
136.30 	(5) for subdivision 1, clause (9), the owner of the
136.31 	qualified low-income housing project; and 
136.32 	(6) for subdivision 1, clause (10), the applicant must be a
136.33 	municipal electric utility or a joint venture of municipal
136.34 	electric utilities.
136.35 	
EFFECTIVE DATE. This section is effective for purchases
136.36 	made after December 31, 2004.

137.1 	Sec. 20. Minnesota Statutes 2004, section 297A.75,
137.2 	subdivision 3, is amended to read:
137.3 		Subd. 3.Application.  (a) The application must include
137.4 	sufficient information to permit the commissioner to verify the
137.5 	tax paid.  If the tax was paid by a contractor, subcontractor,
137.6 	or builder, under subdivision 1, clause (4), (5), (6), (7), (8),
137.7 	or (9), or (10),the contractor, subcontractor, or builder must
137.8 	furnish to the refund applicant a statement including the cost
137.9 	of the exempt items and the taxes paid on the items unless
137.10 	otherwise specifically provided by this subdivision.  The
137.11 	provisions of sections 289A.40 and 289A.50 apply to refunds
137.12 	under this section.
137.13 	(b) An applicant may not file more than two applications
137.14 	per calendar year for refunds for taxes paid on capital
137.15 	equipment exempt under section 297A.68, subdivision 5.
137.16 	
EFFECTIVE DATE. This section is effective for sales and
137.17 	purchases made after December 31, 2004.

137.18 	Sec. 21. [297A.82] MOTOR VEHICLE LEASES.
137.19 		Subdivision 1.Motor vehicle lease price; payment. (a)
137.20 	In the case of a lease of a motor vehicle as provided in section
137.21 	297A.61, subdivision 4, paragraph (k), clause (2), the tax is
137.22 	imposed on the total amount to be paid by the lessee under the
137.23 	lease agreement.  The lessor shall collect the tax in full at
137.24 	the time the lease is executed or, if the tax is included in the
137.25 	lease and the lease is assigned, the tax is due from the
137.26 	original lessor at the time the lease is assigned.  The total
137.27 	amount to be paid by the lessee under the lease agreement equals
137.28 	the agreed-upon value of the vehicle less manufacturer's
137.29 	rebates, the stated residual value of the leased vehicle, and
137.30 	the total value allowed for a vehicle owned by the lessee taken
137.31 	in trade by the lessor, plus the price of any taxable goods and
137.32 	services included in the lease and the rent charge as provided
137.33 	by Code of Federal Regulations, title 12, section 213.4,
137.34 	excluding any rent charge related to the capitalization of the
137.35 	tax.
137.36 	(b) If the total amount paid by the lessee for use of the
138.1 	leased vehicle includes amounts that are not calculated at the
138.2 	time the lease is executed, the tax is imposed and must be
138.3 	collected by the lessor at the time the amounts are paid by the
138.4 	lessee.  In the case of a lease which by its terms may be
138.5 	renewed, the sales tax is due and payable on the total amount to
138.6 	be paid during the initial term of the lease, and then for each
138.7 	subsequent renewal period on the total amount to be paid during
138.8 	the renewal period.
138.9 	(c) If a lease is canceled or rescinded on or before 90
138.10 	days of its execution or if a vehicle is returned to the
138.11 	manufacturer under section 325F.665, the lessor may file a claim
138.12 	for a refund of the total tax paid minus the amount of tax due
138.13 	for the period the vehicle is used by the lessee.
138.14 	(d) If a lessee's obligation to make payments on a lease is
138.15 	canceled more than 90 days after its execution, a credit is
138.16 	allowed against sales tax or motor vehicles sales tax due on a
138.17 	subsequent lease or purchase of a motor vehicle if that lease or
138.18 	purchase is consummated within 30 days of the date the prior
138.19 	lease was canceled.  The amount of the credit is equal to (1)
138.20 	the sales tax paid at the inception of the lease, multiplied by
138.21 	(2) the ratio of the number of full months remaining in the
138.22 	lease at the time of termination compared to the term of the
138.23 	lease used in calculating sales tax paid at the inception of the
138.24 	lease.
138.25 		Subd. 2.Lease originating in another state. When the
138.26 	lease of a motor vehicle as defined in section 297A.61,
138.27 	subdivision 4, paragraph (k), clause (2), originates in another
138.28 	state, the sales tax under subdivision 1 shall be calculated by
138.29 	the lessor on the total amount that is due under the lease
138.30 	agreement after the vehicle is required to be registered in
138.31 	Minnesota.  If the total amount to be paid by the lessee under
138.32 	the lease agreement has already been subjected to tax by another
138.33 	state, a credit for taxes paid in the other state is allowed as
138.34 	provided in section 297A.80.
138.35 	
EFFECTIVE DATE. Subdivision 1 of this section is
138.36 	effective for leases entered into after September 30, 2005.
139.1 	Subdivision 2 of this section is effective for vehicles
139.2 	registering in Minnesota after September 30, 2005.

139.3 	Sec. 22. Minnesota Statutes 2004, section 297A.99,
139.4 	subdivision 9, is amended to read:
139.5 		Subd. 9.Enforcement; collection; and administration.
 139.6 	(a) The commissioner of revenue shall collect the taxes subject
139.7 	to this section.  The commissioner may collect the tax with the
139.8 	state sales and use tax.  All taxes under this section are
139.9 	subject to the same penalties, interest, and enforcement
139.10 	provisions as apply to the state sales and use tax.
139.11 	(b) A request for a refund of state sales tax paid in
139.12 	excess of the amount of tax legally due includes a request for a
139.13 	refund of the political subdivision taxes paid on the goods or
139.14 	services.  The commissioner shall refund to the taxpayer the
139.15 	full amount of the political subdivision taxes paid on exempt
139.16 	sales or use.
139.17 	(c) A political subdivision shall incur a legal debt to the
139.18 	state for refunds of local sales taxes made by the commissioner
139.19 	after a tax has terminated when the amount of the refunds
139.20 	exceeds the amount of local sales taxes collected for but not
139.21 	remitted to the political subdivision.  The commissioner of
139.22 	revenue shall bill the political subdivision for this difference.
139.23 	The commissioner shall deposit the money in the state treasury
139.24 	and credit it to the general fund.
139.25 	
EFFECTIVE DATE. This section is effective for all refunds
139.26 	made on or after the day following final enactment.

139.27 	Sec. 23. Minnesota Statutes 2004, section 297A.99, is
139.28 	amended by adding a subdivision to read:
139.29 		Subd. 12a.Notification of use tax. Any political
139.30 	subdivision imposing a local sales and use tax, which maintains
139.31 	an official web site, must display on its main home page a link
139.32 	to a notice that residents and businesses in the political
139.33 	subdivision may owe a local use tax on purchases of goods and
139.34 	services made outside of the political subdivision limits.  The
139.35 	notice must provide information, including a link to any
139.36 	relevant Department of Revenue Web site, on how the taxpayer may
140.1 	get information and forms necessary for calculating and paying
140.2 	the tax.  If the political subdivision provides and bills for
140.3 	sewer, water, garbage collection, or other public utility
140.4 	services, the billing statement must also include at least once
140.5 	per year a notice that residents and businesses may owe a local
140.6 	use tax on purchases made outside of the political subdivision
140.7 	limits and provide information on how the taxpayer may get
140.8 	information and forms necessary for calculating and paying the
140.9 	tax.
140.10 	
EFFECTIVE DATE. This section is effective January 1, 2006.

140.11 	Sec. 24. Laws 1991, chapter 291, article 8, section 27, is
140.12 	amended by adding a subdivision to read:
140.13 		Subd. 3a.Limitations on use. Notwithstanding any other
140.14 	provision of this section, the city may use up to $1,500,000
140.15 	annually, of the revenues collected from the taxes imposed in
140.16 	subdivisions 1 and 2, to fund operation, maintenance, and
140.17 	improvements for the Riverfront 2000 and related facilities.
140.18 	This amount may only be used if sufficient revenues remain to
140.19 	meet the annual debt obligations for the bonds paid from these
140.20 	revenue sources.  This authority to spend money for operation,
140.21 	maintenance, and improvements expires April 1, 2007, unless
140.22 	approved by the voters at a special or general election held by
140.23 	December 31, 2006.
140.24 	
EFFECTIVE DATE. This section is effective upon compliance
140.25 	by the governing body of the city of Mankato with Minnesota
140.26 	Statutes, section 645.021, subdivision 3.

140.27 	Sec. 25. Laws 1991, chapter 291, article 8, section 27,
140.28 	subdivision 4, is amended to read:
140.29 		Subd. 4.Expiration of taxing authority and expenditure
140.30 	limitation. The authority granted by subdivisions 1 and 2 to
140.31 	the city to impose a sales tax and an excise tax shall expire
140.32 	when the principal and interest on on December 31, 2015, unless
140.33 	sufficient revenues are not available to defease any bonds or
140.34 	obligations issued to finance construction of Riverfront 2000
140.35 	and related facilities have been paid or at an earlier time as
140.36 	the city shall, by ordinance, determine.  The total capital,
141.1 	administrative, and operating expenditures payable from bond
141.2 	proceeds and revenues received from the taxes authorized by
141.3 	subdivisions 1 and 2, excluding investment earnings on bond
141.4 	proceeds and revenues, shall not exceed $25,000,000 for
141.5 	Riverfront 2000 and related facilities. If sufficient funds are
141.6 	not available to defease the bonds, the tax expires December 31,
141.7 	2018, but all revenues from taxes imposed after December 31,
141.8 	2015, must be used to defease the bonds.  The city may, by
141.9 	ordinance, terminate the tax at an earlier date.
141.10 	
EFFECTIVE DATE. This section is effective upon compliance
141.11 	by the governing body of the city of Mankato with Minnesota
141.12 	Statutes, section 645.021, subdivision 3.

141.13 	Sec. 26. Laws 1993, chapter 375, article 9, section 46,
141.14 	subdivision 2, as amended by Laws 1997, chapter 231, article 7,
141.15 	section 40, and Laws 1998, chapter 389, article 8, section 30,
141.16 	and Laws 2003, First Special Session chapter 21, article 8,
141.17 	section 13, is amended to read:
141.18 		Subd. 2.Use of revenues. Revenues received from the tax
141.19 	authorized by subdivision 1 may only be used by the city to pay
141.20 	the cost of collecting the tax, and to pay for the following
141.21 	projects or to secure or pay any principal, premium, or interest
141.22 	on bonds issued in accordance with subdivision 3 for the
141.23 	following projects.
141.24 	(a) To pay all or a portion of the capital expenses of
141.25 	construction, equipment and acquisition costs for the expansion
141.26 	and remodeling of the St. Paul Civic Center complex, including
141.27 	the demolition of the existing arena and the construction and
141.28 	equipping of a new arena.
141.29 	(b) Except as provided in paragraphs (e) and (f),the
141.30 	remainder of the funds must be spent for:
141.31 	(1) capital projects to further residential, cultural,
141.32 	commercial, and economic development in both downtown St. Paul
141.33 	and St. Paul neighborhoods; and
141.34 	(2) capital and operating expenses of cultural
141.35 	organizations in the city, provided that the amount spent under
141.36 	this clause must equal ten percent of the total amount spent
142.1 	under this paragraph in any year.
142.2 	(c) The amount apportioned under paragraph (b) shall be no
142.3 	less than 60 percent of the revenues derived from the tax each
142.4 	year, except to the extent that a portion of that amount is
142.5 	required to pay debt service on (1) bonds issued for the
142.6 	purposes of paragraph (a) prior to March 1, 1998; or (2) bonds
142.7 	issued for the purposes of paragraph (a) after March 1, 1998,
142.8 	but only if the city council determines that 40 percent of the
142.9 	revenues derived from the tax together with other revenues
142.10 	pledged to the payment of the bonds, including the proceeds of
142.11 	definitive bonds, is expected to exceed the annual debt service
142.12 	on the bonds.
142.13 	(d) If in any year more than 40 percent of the revenue
142.14 	derived from the tax authorized by subdivision 1 is used to pay
142.15 	debt service on the bonds issued for the purposes of paragraph
142.16 	(a) and to fund a reserve for the bonds, the amount of the debt
142.17 	service payment that exceeds 40 percent of the revenue must be
142.18 	determined for that year.  In any year when 40 percent of the
142.19 	revenue produced by the sales tax exceeds the amount required to
142.20 	pay debt service on the bonds and to fund a reserve for the
142.21 	bonds under paragraph (a), the amount of the excess must be made
142.22 	available for capital projects to further residential, cultural,
142.23 	commercial, and economic development in the neighborhoods and
142.24 	downtown until the cumulative amounts determined for all years
142.25 	under the preceding sentence have been made available under this
142.26 	sentence.  The amount made available as reimbursement in the
142.27 	preceding sentence is not included in the 60 percent determined
142.28 	under paragraph (c).
142.29 	(e) In each of calendar years 2006, 2007, 2008, and 2009,
142.30 	revenue not to exceed $3,500,000 may be used to pay the
142.31 	principal of bonds issued for capital projects of the city.
142.32 	After December 31, 2009, revenue from the tax imposed under
142.33 	subdivision 1 may not be used for this purpose.
142.34 	(f) By January 15 of each odd-numbered year, the mayor and
142.35 	the city council must report to the legislature on the use of
142.36 	sales tax revenues during the preceding two-year one-year period.

143.1 	Sec. 27. Laws 1993, chapter 375, article 9, section 46,
143.2 	subdivision 3, as amended by Laws 1998, chapter 389, article 8,
143.3 	section 31, is amended to read:
143.4 		Subd. 3.Bonds. The city may issue general obligation
143.5 	bonds or special revenue bonds to finance all or a portion of
143.6 	the cost for projects authorized in subdivision 2, paragraph (a)
143.7 	or (b).  The debt represented by the bonds shall not be included
143.8 	in computing any debt limitations applicable to the city.  The
143.9 	bonds may be paid from or secured by any funds available to the
143.10 	city, including the tax authorized under subdivision 1, any
143.11 	revenues derived from the project, tax increments from the tax
143.12 	increment district that includes the project, and revenue from
143.13 	any lodging tax imposed under Laws 1982, chapter 523, article
143.14 	25, section 1.  The bonds may be issued in one or more series
143.15 	and sold without election on the question of issuance of the
143.16 	bonds or a property tax to pay them.  Except as otherwise
143.17 	provided in this section, the bonds must be issued, sold, and
143.18 	secured in the manner provided in Minnesota Statutes, chapter
143.19 	475.  The aggregate principal amount of bonds issued under this
143.20 	subdivision for projects authorized in subdivision 2, paragraph
143.21 	(a),may not exceed $65 million, provided that the city may
143.22 	issue additional bonds under this subdivision for projects
143.23 	authorized in subdivision 2, paragraph (a),as long as the total
143.24 	principal amount of the additional bonds together with the
143.25 	outstanding principal amount of the bonds previously issued
143.26 	under this subdivision for projects authorized in subdivision 2,
143.27 	paragraph (a),does not exceed $130 million.  The bonds
143.28 	authorized by this subdivision shall not be included in local
143.29 	general obligation debt as defined in Laws 1971, chapter 773, as
143.30 	amended, including Laws 1992, chapter 511, and shall not affect
143.31 	the amount of capital improvement bonds authorized to be issued
143.32 	by the city of St. Paul. Bonds to pay for projects authorized
143.33 	in subdivision 2, paragraph (b), may be issued if the city
143.34 	council first determines that 20 percent of the revenues derived
143.35 	from the tax authorized under section 1 together with other
143.36 	revenues pledged to payment of the bonds, including the proceeds
144.1 	of definitive bonds, is expected to exceed the annual debt
144.2 	service on the bonds.

144.3 	Sec. 28. Laws 1998, chapter 389, article 8, section 43,
144.4 	subdivision 3, is amended to read:
144.5 		Subd. 3.Use of revenues. Revenues received from the
144.6 	taxes authorized by subdivisions 1 and 2 must be used by the
144.7 	city to pay for the cost of collecting and administering the
144.8 	taxes and to pay for the following projects:
144.9 	(1) transportation infrastructure improvements including
144.10 	both regional highway and airport improvements;
144.11 	(2) improvements to the civic center complex;
144.12 	(3) a municipal water, sewer, and storm sewer project
144.13 	necessary to improve regional ground water quality; and
144.14 	(4) construction of a regional recreation and sports center
144.15 	and associated other higher education facilities available for
144.16 	both community and student use, located at or adjacent to the
144.17 	Rochester center.
144.18 	The total amount of capital expenditures or bonds for these
144.19 	projects that may be paid from the revenues raised from the
144.20 	taxes authorized in this section may not exceed
144.21 	$71,500,000 $111,500,000.  The total amount of capital
144.22 	expenditures or bonds for the project in clause (4) that may be
144.23 	paid from the revenues raised from the taxes authorized in this
144.24 	section may not exceed $20,000,000 $28,000,000.
144.25 	
EFFECTIVE DATE. This section is effective the day
144.26 	following final enactment.

144.27 	Sec. 29. Laws 1998, chapter 389, article 8, section 43,
144.28 	subdivision 4, is amended to read:
144.29 		Subd. 4.Bonding authority. (a) The city may issue bonds
144.30 	under Minnesota Statutes, chapter 475, to finance the capital
144.31 	expenditure and improvement projects.  An election to approve
144.32 	the up to $71,500,000 in bonds under Minnesota Statutes, section
144.33 	475.58, may be held in combination with the election to
144.34 	authorize imposition of the tax under subdivision 1.  Whether to
144.35 	permit imposition of the tax and issuance of bonds may be posed
144.36 	to the voters as a single question.  The question must state
145.1 	that the sales tax revenues are pledged to pay the bonds, but
145.2 	that the bonds are general obligations and will be guaranteed by
145.3 	the city's property taxes. An election to approve up to an
145.4 	additional $40,000,000 of bonds under Minnesota Statutes,
145.5 	section 475.58, may be held in combination with the election to
145.6 	authorize extension of the tax under subdivision 5, paragraph
145.7 	(b).
145.8 	The city may enter into an agreement with Olmsted County
145.9 	under which the city and the county agree to jointly undertake
145.10 	and finance certain roadway infrastructure improvements.  The
145.11 	agreement may provide that the city will make available to the
145.12 	county a portion of the sales tax revenues collected pursuant to
145.13 	the authority granted in this section and the bonding authority
145.14 	provided in this subdivision.  The county may, pursuant to the
145.15 	agreement, issue its general obligation bonds in a principal
145.16 	amount not exceeding the amount authorized by its agreement with
145.17 	the city payable primarily from the sales tax revenues from the
145.18 	city under the agreement.  The county's bonds must be issued in
145.19 	accordance with the provisions of Minnesota Statutes, chapter
145.20 	475, except that no election is required for the issuance of the
145.21 	bonds and the bonds are not included in the net debt of the
145.22 	county.
145.23 	(b) The issuance of bonds under this subdivision is not
145.24 	subject to Minnesota Statutes, section 275.60.
145.25 	(c) The bonds are not included in computing any debt
145.26 	limitation applicable to the city, and the levy of taxes under
145.27 	Minnesota Statutes, section 475.61, to pay principal of and
145.28 	interest on the bonds is not subject to any levy limitation.
145.29 	The aggregate principal amount of bonds, plus the aggregate of
145.30 	the taxes used directly to pay eligible capital expenditures and
145.31 	improvements may not exceed $71,500,000 $111,500,000, plus an
145.32 	amount equal to the costs related to issuance of the bonds.
145.33 	(d) The taxes may be pledged to and used for the payment of
145.34 	the bonds and any bonds issued to refund them, only if the bonds
145.35 	and any refunding bonds are general obligations of the city.
145.36 	
EFFECTIVE DATE. This section is effective the day
146.1 	following final enactment.

146.2 	Sec. 30. Laws 1998, chapter 389, article 8, section 43,
146.3 	subdivision 5, is amended to read:
146.4 		Subd. 5.Termination of taxes. (a) The taxes imposed
146.5 	under subdivisions 1 and 2 expire at the later of (1) December
146.6 	31, 2009, or (2) when the city council determines that
146.7 	sufficient funds have been received from the taxes to finance
146.8 	the projects and to first $71,500,000 of capital expenditures
146.9 	and bonds for the projects authorized in subdivision 3,
146.10 	including the amount to prepay or retire at maturity the
146.11 	principal, interest, and premium due on any bonds issued for the
146.12 	projects under subdivision 4, unless the taxes are extended as
146.13 	allowed in paragraph (b).  Any funds remaining after completion
146.14 	of the project and retirement or redemption of the bonds may be
146.15 	placed in the general fund of the city shall also be used to
146.16 	fund the projects under subdivision 3.  The taxes imposed under
146.17 	subdivisions 1 and 2 may expire at an earlier time if the city
146.18 	so determines by ordinance.
146.19 	(b) Notwithstanding Minnesota Statutes, sections 297A.99
146.20 	and 477A.016, or any other contrary provision of law, ordinance,
146.21 	or city charter, the city of Rochester may, by ordinance, extend
146.22 	the taxes authorized in subdivisions 1 and 2 beyond December 31,
146.23 	2009, if approved by the voters of the city at a special
146.24 	election in 2005 or the general election in 2006.  The question
146.25 	put to the voters must indicate that an affirmative vote would
146.26 	allow up to an additional $40,000,000 of sales tax revenues be
146.27 	raised and up to $40,000,000 of bonds to be issued above the
146.28 	amount authorized in the June 23, 1998, referendum for the
146.29 	projects specified in subdivision 3.  If the taxes authorized in
146.30 	subdivisions 1 and 2 are extended under this paragraph, the
146.31 	taxes expire when the city council determines that sufficient
146.32 	funds have been received from the taxes to finance the projects
146.33 	and to prepay or retire at maturity the principal, interest, and
146.34 	premium due on any bonds issued for the projects under
146.35 	subdivision 4.  Any funds remaining after completion of the
146.36 	project and retirement or redemption of the bonds may be placed
147.1 	in the general fund of the city.
147.2 	
EFFECTIVE DATE. This section is effective the day after
147.3 	compliance by the governing body of the city of Rochester with
147.4 	Minnesota Statutes, section 645.021, subdivision 3.

147.5 	Sec. 31. Laws 2001, First Special Session chapter 5,
147.6 	article 12, section 44, the effective date, is amended to read:

147.7 	EFFECTIVE DATE. This section is effective for sales and
147.8 	purchases made after July 31, 2001, and before August 1, 2005.

147.9 	Sec. 32. Laws 2001, First Special Session chapter 5,
147.10 	article 12, section 67, the effective date, is amended to read:

147.11 	EFFECTIVE DATE. This section is effective for purchases
147.12 	and sales made after June 30, 2001, and before January 1, 2003 
147.13 	July 1, 2007.
147.14 	EFFECTIVE DATE.This section is effective the day
147.15 	following final enactment.

147.16 	Sec. 33. Laws 2001, First Special Session chapter 5,
147.17 	article 12, section 95, as amended by Laws 2002, chapter 377,
147.18 	article 3, section 24, and Laws 2003, First Special Session
147.19 	chapter 21, article 8, section 15, is amended to read:

147.20 	Sec. 95. REPEALER.
 147.21 	(a) Minnesota Statutes 2000, sections 297A.61, subdivision
147.22 	16; 297A.68, subdivision 21; and 297A.71, subdivision 2, are
147.23 	repealed effective for sales and purchases occurring after June
147.24 	30, 2001, except that the repeal of section 297A.61, subdivision
147.25 	16, paragraph (d), is effective for sales and purchases
147.26 	occurring after July 31, 2001.
147.27 	(b) Minnesota Statutes 2000, sections section 297A.62,
147.28 	subdivision 2, and 297A.64, subdivision 1, are is repealed
147.29 	effective for sales and purchases made after December 31, 2005.
147.30 	(c) Minnesota Statutes 2000, section 297A.71, subdivision
147.31 	15, is repealed effective for sales and purchases made after
147.32 	June 30, 2002.
147.33 	(d) Minnesota Statutes 2000, section 297A.71, subdivision
147.34 	16, is repealed effective for sales and purchases occurring
147.35 	after December 31, 2002.

147.36 	EFFECTIVE DATE. This section is effective the day
148.1 	following final enactment.

148.2 	Sec. 34. Laws 2002, chapter 377, article 3, section 4, the
148.3 	effective date, is amended to read:

148.4 	EFFECTIVE DATE. With the exception of clause (2), item
148.5 	(ii),This section is effective for sales and purchases made
148.6 	after June 30, 2002. Clause (2), item (ii), is effective for
148.7 	sales and purchases made after June 30, 2002, and before January
148.8 	1, 2006.
148.9 	EFFECTIVE DATE.This section is effective the day
148.10 	following final enactment.

148.11 	Sec. 35. Laws 2002, chapter 377, article 11, section 2,
148.12 	subdivision 1, is amended to read:
148.13 		Subdivision 1.Sales and use tax. (a) Notwithstanding
148.14 	Minnesota Statutes, section 477A.016, or any other provision of
148.15 	law, ordinance, or city charter, the following cities may, by
148.16 	ordinance, impose a sales and use tax of one-half of one percent
148.17 	for the purposes specified in subdivision 2:
148.18 	(1) the city of St. Cloud, pursuant to the approval of the
148.19 	city voters at the general election held on November 7, 2000;
148.20 	(2) the city of Sartell, pursuant to the approval of the
148.21 	city voters at an election held in November 1999; and 
148.22 	(3) each of the cities of Sauk Rapids, Waite Park,St.
148.23 	Joseph, and St. Augusta, pursuant to the approval of the voters
148.24 	of that city at the next general election following the date of
148.25 	final enactment of this act, as provided for in subdivision 3;
148.26 	and 
148.27 	(4) the city of Waite Park pursuant to the approval of the
148.28 	voters at the general election held November 4, 2003.
148.29 	(b) The provisions of Minnesota Statutes, section 297A.99,
148.30 	govern the imposition, administration, collection, and
148.31 	enforcement of the taxes authorized under this subdivision.
148.32 	(c) The tax in Sartell must be used for the purposes listed
148.33 	in subdivision 2, notwithstanding other purposes listed in the
148.34 	referendum, and are not subject to the requirements of Minnesota
148.35 	Statutes, section 297A.99, subdivision 3.
148.36 	
EFFECTIVE DATE. This section is effective the day after
149.1 	compliance by the governing body of the city of Waite Park with
149.2 	Minnesota Statutes, section 645.021, subdivision 3.

149.3 	Sec. 36. Laws 2002, chapter 377, article 11, section 2,
149.4 	subdivision 4, is amended to read:
149.5 		Subd. 4.Imposition and termination of tax. The tax
149.6 	authorized by each city under subdivision 1 shall be imposed
149.7 	beginning January 1, 2003, or on the first day of a calendar
149.8 	quarter after the city has been approved at a referendum and
149.9 	authorized by city ordinance,and shall expire December 31, 2005 
149.10 	March 31, 2007, unless another local sales tax is imposed under
149.11 	another law, in which case this tax will expire when the other
149.12 	tax is imposed.  The tax may expire at an earlier time if the
149.13 	city so determines by ordinance.
149.14 	
EFFECTIVE DATE. This section is effective the day
149.15 	following final enactment.

149.16 	Sec. 37. ST. CLOUD AREA CITIES; SALES AND USE TAX
149.17 	AUTHORIZED.
 149.18 		Subdivision 1.Sales and use tax
149.19 	authorized. Notwithstanding Minnesota Statutes, sections
149.20 	297A.99, subdivision 3, paragraph (d), and 477A.016, or any
149.21 	other provision of law, ordinance, or city charter, the
149.22 	following cities may, by ordinance, impose a sales and use tax
149.23 	of one-half of one percent for the purposes specified in
149.24 	subdivision 2:
149.25 	(1) the cities of St. Cloud and St. Joseph, pursuant to the
149.26 	approval of the city voters at the general election held on
149.27 	November 2, 2004; and 
149.28 	(2) the cities of St. Augusta, Sartell, Sauk Rapids, and
149.29 	Waite Park pursuant to the approval of the voters of that city
149.30 	at the next general election.
149.31 	The provisions of Minnesota Statutes, section 297A.99,
149.32 	except subdivision 3, paragraph (d), govern the imposition,
149.33 	administration, collection, and enforcement of the tax
149.34 	authorized under this section, unless specifically provided for
149.35 	otherwise in another subdivision.
149.36 		Subd. 2.Use of revenues. (a) Revenues received from the
150.1 	tax authorized by subdivision 1 by the city of St. Cloud must be
150.2 	used for the cost of collecting and administering the tax and to
150.3 	pay all or part of the capital or administrative costs of the
150.4 	development, acquisition, construction, improvement, and
150.5 	securing and paying debt service on bonds or other obligations
150.6 	issued to finance the following regional projects as approved by
150.7 	the voters and specifically detailed in the referendum
150.8 	authorizing the tax:
150.9 	(1) St. Cloud Regional Airport;
150.10 	(2) regional transportation improvements;
150.11 	(3) community and aquatics centers;
150.12 	(4) regional public libraries; and 
150.13 	(5) acquisition and improvement of regional park land and
150.14 	open space.
150.15 	(b) Revenues received from the tax authorized by
150.16 	subdivision 1 by the cities of St. Joseph, Waite Park, Sartell,
150.17 	Sauk Rapids, and St. Augusta must be used for the cost of
150.18 	collecting and administering the tax and to pay all or part of
150.19 	the capital or administrative costs of the development,
150.20 	acquisition, construction, improvement, and securing and paying
150.21 	debt service on bonds or other obligations issued to fund the
150.22 	projects specifically approved by the voters at the referendum
150.23 	authorizing the tax.  The portion of revenues from the city
150.24 	going to fund the regional airport or regional library located
150.25 	in the city of St. Cloud will be as required under the
150.26 	applicable joint powers agreement.
150.27 	(c) The use of revenues received from the taxes authorized
150.28 	in subdivision 1 for projects allowed under paragraphs (a) and
150.29 	(b) are limited to the amount authorized for each project under
150.30 	the enabling referendum.
150.31 	Subd. 3.[ST. CLOUD BONDING AUTHORIZED.] (a) The city of
150.32 	St. Cloud may issue general obligation bonds of up to
150.33 	$30,000,000 to pay for the costs of the regional public library
150.34 	pursuant to the approval of the projects by the city voters at
150.35 	the election held on November 2, 2004.
150.36 	(b) Each city may issue general obligation bonds for
151.1 	another project authorized under subdivision 2 without separate
151.2 	bonding approval at a referendum only if the issuance of bonds
151.3 	for that project was included in the authorizing question.  The
151.4 	amount of bonds issued for a project is limited to the maximum
151.5 	amount of local sales tax revenues that may be spent on the
151.6 	project under the authorizing question.
151.7 	(c) The debt represented by the bonds authorized under this
151.8 	subdivision must not be included in computing any debt
151.9 	limitations applicable to the city, and the levy of taxes
151.10 	required by Minnesota Statutes, section 475.61, to pay the
151.11 	principal or any interest on the bonds must not be subject to
151.12 	any levy limitations or be included in computing or applying any
151.13 	levy limitation applicable to the city.
151.14 		Subd. 4.Termination of tax. The tax imposed in the
151.15 	cities of St. Joseph, St. Cloud, St. Augusta, Sartell, Sauk
151.16 	Rapids, and Waite Park under subdivision 1 expires when the city
151.17 	council determines that sufficient funds have been collected
151.18 	from the tax to retire or redeem the bonds and obligations
151.19 	authorized under subdivision 2, paragraph (a), but no later than
151.20 	December 31, 2018.
151.21 	
EFFECTIVE DATE. This section is effective for the city
151.22 	that approves it the day after compliance by the governing body
151.23 	of each city with Minnesota Statutes, section 645.021,
151.24 	subdivision 3, for sales and purchases made on and after January
151.25 	1, 2006.  Agreements and contracts for spending may not be
151.26 	entered into and spending may not occur for the purposes
151.27 	authorized in subdivision 2 nor may bonds be issued under
151.28 	subdivision 3 until January 1, 2006.

151.29 	Sec. 38. CITY OF ALBERT LEA; SALES AND USE TAX.
 151.30 		Subdivision 1.Sales and use tax
151.31 	authorized. Notwithstanding Minnesota Statutes, section
151.32 	477A.016, or any other provision of law, ordinance, or city
151.33 	charter, the city of Albert Lea may, by ordinance, impose a
151.34 	sales and use tax of one-half of one percent for the purposes
151.35 	specified in subdivision 2.  The provisions of Minnesota
151.36 	Statutes, section 297A.99, govern the imposition,
152.1 	administration, collection, and enforcement of the tax
152.2 	authorized under this subdivision.
152.3 		Subd. 2.Use of revenues. The proceeds of the tax
152.4 	imposed under this section shall be used to pay for lake
152.5 	improvement projects as detailed in the Shell Rock River
152.6 	watershed plan.
152.7 		Subd. 3.Referendum. If the Albert Lea City Council
152.8 	proposes to impose the tax authorized by this section, the
152.9 	question of imposing the tax must be submitted to the voters at
152.10 	the next general election.
152.11 		Subd. 4.Termination of taxes. The taxes imposed under
152.12 	this section expire at the earlier of (1) ten years after the
152.13 	taxes are first imposed, or (2) when the city council first
152.14 	determines that the amount of revenues raised to pay for the
152.15 	projects under subdivision 2, shall meet or exceed the sum of
152.16 	$15,000,000.  Any funds remaining after completion of the
152.17 	projects may be placed in the general fund of the city.
152.18 	
EFFECTIVE DATE. This section is effective the day after
152.19 	compliance by the governing body of the city of Albert Lea with
152.20 	Minnesota Statutes, section 645.021, subdivision 3.

152.21 	Sec. 39. CITY OF BEMIDJI.
 152.22 		Subdivision 1.Sales and use tax authorized.
 152.23 	Notwithstanding Minnesota Statutes, section 477A.016, or any
152.24 	other provision of law, ordinance, or city charter, pursuant to
152.25 	the approval of the city voters at the general election held on
152.26 	November 5, 2002, the city of Bemidji may impose by ordinance a
152.27 	sales and use tax of one-half of one percent for the purposes
152.28 	specified in subdivision 2.  The provisions of Minnesota
152.29 	Statutes, section 297A.99, govern the imposition,
152.30 	administration, collection, and enforcement of the tax
152.31 	authorized under this subdivision.
152.32 		Subd. 2.Use of revenues. Revenues received from the tax
152.33 	authorized by subdivision 1 must be used for the cost of
152.34 	collecting and administering the tax and to pay all or part of
152.35 	the capital or administrative costs of the acquisition,
152.36 	construction, and improvement of parks and trails within the
153.1 	city, as provided for in the city of Bemidji's parks, open
153.2 	space, and trail system plan, adopted by the Bemidji City
153.3 	Council on November 21, 2001.  Authorized expenses include, but
153.4 	are not limited to, acquiring property, paying construction
153.5 	expenses related to the development of these facilities and
153.6 	improvements, and securing and paying debt service on bonds or
153.7 	other obligations issued to finance acquisition, construction,
153.8 	improvement, or development of parks and trails within the city
153.9 	of Bemidji.
153.10 		Subd. 3.Bonds. Pursuant to the approval of the city
153.11 	voters at the general election held on November 5, 2002, the
153.12 	city of Bemidji may issue, without an additional election,
153.13 	general obligation bonds of the city in an amount not to exceed
153.14 	$9,826,000 to pay capital and administrative expenses for the
153.15 	acquisition, construction, improvement, and development of parks
153.16 	and trails as specified in subdivision 2.  The debt represented
153.17 	by the bonds must not be included in computing any debt
153.18 	limitations applicable to the city, and the levy of taxes
153.19 	required by Minnesota Statutes, section 475.61, to pay the
153.20 	principal of any interest on the bonds must not be subject to
153.21 	any levy limitations or be included in computing or applying any
153.22 	levy limitation applicable to the city.
153.23 		Subd. 4.Termination of tax. The tax imposed under
153.24 	subdivision 1 expires when the Bemidji City Council determines
153.25 	that the amount described in subdivision 3 has been received
153.26 	from the tax to finance the capital and administrative costs for
153.27 	acquisition, construction, improvement, and development of parks
153.28 	and trails and to repay or retire at maturity the principal,
153.29 	interest, and premium due on any bonds issued for the park and
153.30 	trail improvements under subdivision 3.  Any funds remaining
153.31 	after completion of the park and trail improvements and
153.32 	retirement or redemption of the bonds may be placed in the
153.33 	general fund of the city.  The tax imposed under subdivision 1
153.34 	may expire at an earlier time if the city so determines by
153.35 	ordinance.
153.36 	
EFFECTIVE DATE. This section is effective the day after
154.1 	compliance by the governing body of the city of Bemidji with
154.2 	Minnesota Statutes, section 645.021, subdivision 3.

154.3 	Sec. 40. LODGING TAX; HUBBARD COUNTY AUTHORITY.
 154.4 	Notwithstanding Minnesota Statutes, section 469.190,
154.5 	subdivisions 1 and 4, Hubbard County may impose the local
154.6 	lodging tax authorized in that section in all towns and
154.7 	unorganized territories within the county, and no town located
154.8 	in the county may impose the local lodging tax.  Any local
154.9 	lodging tax imposed by a town in Hubbard County prior to the
154.10 	effective date of this section expires the day that a county tax
154.11 	is imposed under this section.
154.12 	If the county board exercises the authority under this
154.13 	section, it must determine by resolution that imposition of the
154.14 	tax is in the county's interest.  The resolution is subject to
154.15 	the notice and reverse referendum requirements that would apply
154.16 	under Minnesota Statutes, section 469.190, subdivision 5, if the
154.17 	county was imposing the tax in an unorganized territory.  The
154.18 	provisions of Minnesota Statutes, section 469.190, subdivisions
154.19 	2, 3, 6, and 7, apply to a tax imposed under this section.

154.20 	EFFECTIVE DATE. This section is effective the day after
154.21 	the governing body of Hubbard County and its chief clerical
154.22 	officer comply with Minnesota Statutes, section 645.021,
154.23 	subdivisions 2 and 3.

154.24 	Sec. 41. CITY OF PROCTOR; LODGING TAX.
 154.25 	The city of Proctor may use up to ten percent of the
154.26 	revenues received from the lodging tax imposed by the city under
154.27 	Minnesota Statutes, section 469.190, for preservation of the
154.28 	Caboose and the Baldwin Locomotive, Class M3 Mallet, Number 225,
154.29 	donated to the city by the Duluth, Missabe and Iron Range
154.30 	Railway Company, and the F-101F aircraft, serial number 59-0407,
154.31 	donated to the city by the Department of the Air Force.

154.32 	EFFECTIVE DATE. This section is effective the day
154.33 	following final enactment.

154.34 	Sec. 42. CITY OF WILLMAR.
 154.35 		Subdivision 1.Sales and use tax authorized.
 154.36 	Notwithstanding Minnesota Statutes, section 477A.016, or any
155.1 	other provision of law, ordinance, or city charter, pursuant to
155.2 	the approval of the city voters at the general election held on
155.3 	November 2, 2004, the city of Willmar may impose by ordinance a
155.4 	sales and use tax of one-half of one percent for the purposes
155.5 	specified in subdivision 2.  The provisions of Minnesota
155.6 	Statutes, section 297A.99, govern the imposition,
155.7 	administration, collection, and enforcement of the tax
155.8 	authorized under this subdivision.
155.9 		Subd. 2.Use of revenues. Revenues received from the tax
155.10 	authorized by subdivision 1 must be used for the cost of
155.11 	collecting and administering the tax and to pay all or part of
155.12 	the capital or administrative costs of the development,
155.13 	acquisition, construction, and improvement of the following
155.14 	projects:
155.15 	(1) completion and expansion of the airport/industrial
155.16 	park;
155.17 	(2) hiking and biking trails;
155.18 	(3) connection of the Blue Line and Civic Center buildings;
155.19 	and 
155.20 	(4) purchase of that portion of the Willmar Regional
155.21 	Treatment Center campus located west of Marked Trunk Highway 71.
155.22 	Authorized expenses include, but are not limited to,
155.23 	acquiring property, paying construction expenses related to the
155.24 	development of these facilities and improvements, and securing
155.25 	and paying debt service on bonds or other obligations issued to
155.26 	finance acquisition, construction, improvement, or development
155.27 	of these projects.
155.28 		Subd. 3.Bonds. The city of Willmar may issue without an
155.29 	additional election general obligation bonds of the city in an
155.30 	amount not to exceed $8,000,000 to pay capital and
155.31 	administrative expenses for the acquisition, construction,
155.32 	improvement, and development of the projects listed in
155.33 	subdivision 2.  The debt represented by the bonds must not be
155.34 	included in computing any debt limitations applicable to the
155.35 	city, and the levy of taxes required by Minnesota Statutes,
155.36 	section 475.61, to pay the principal or any interest on the
156.1 	bonds, and must not be subject to any levy limitations or be
156.2 	included in computing or applying any levy limitation applicable
156.3 	to the city.
156.4 		Subd. 4.Termination of tax. The tax imposed under
156.5 	subdivision 1 expires at the later of (1) seven years after the
156.6 	date the tax is first imposed, or (2) when the Willmar City
156.7 	Council determines that the amount described in subdivision 3
156.8 	has been received from the tax to finance the capital and
156.9 	administrative costs, and to repay or retire at maturity the
156.10 	principal, interest, and premium due on any bonds issued under
156.11 	subdivision 3.  Any funds remaining after completion of the
156.12 	projects listed in subdivision 2 and retirement or redemption of
156.13 	the bonds may be placed in the general fund of the city.  The
156.14 	tax imposed under subdivision 1 may expire at an earlier time if
156.15 	the city so determines by ordinance.
156.16 	
EFFECTIVE DATE. This section is effective the day after
156.17 	compliance by the governing body of the city of Willmar with
156.18 	Minnesota Statutes, section 645.021, subdivision 3.

156.19 	Sec. 43. CITY OF WINONA; TAXES AUTHORIZED.
 156.20 		Subdivision 1.Sales and use tax
156.21 	authorized. Notwithstanding Minnesota Statutes, section
156.22 	477A.016, or any other provision of law, ordinance, or city
156.23 	charter, if approved by the voters pursuant to Minnesota
156.24 	Statutes, section 297A.99, the city of Winona may impose by
156.25 	ordinance a sales and use tax of one-half of one percent for the
156.26 	purposes specified in subdivision 3.  The provisions of
156.27 	Minnesota Statutes, section 297A.99, govern the imposition,
156.28 	administration, collection, and enforcement of the tax
156.29 	authorized under this subdivision.
156.30 		Subd. 2.Excise tax authorized. Notwithstanding
156.31 	Minnesota Statutes, section 477A.016, or any other contrary
156.32 	provision of law, ordinance, or city charter, the city of Winona
156.33 	may impose by ordinance, for the purposes specified in
156.34 	subdivision 3, an excise tax of up to $20 per motor vehicle, as
156.35 	defined by ordinance, purchased or acquired from any person
156.36 	engaged within the city in the business of selling motor
157.1 	vehicles at retail.
157.2 		Subd. 3.Use of revenues. Revenues received from the
157.3 	taxes authorized by subdivisions 1 and 2 must be used to pay all
157.4 	or part of the capital costs of transportation contained in the
157.5 	Minnesota Department of Transportation's Winona Intermodal study
157.6 	dated June 2002 and in the resolution approved by the city
157.7 	council on January 3, 2005, including securing or paying debt
157.8 	service on bonds issued under subdivision 4, for the
157.9 	transportation projects and to pay the cost of collecting and
157.10 	administering the tax.  Authorized costs include, but are not
157.11 	limited to, acquiring property and paying construction and
157.12 	engineering costs related to the projects.
157.13 		Subd. 4.Bonds. The city of Winona, if approved by
157.14 	voters pursuant to Minnesota Statutes, section 297A.99, may
157.15 	issue general obligation bonds of the city, in one or more
157.16 	series, in the aggregate principal amount not to exceed
157.17 	$20,000,000 to pay capital and administrative costs of the
157.18 	transportation projects.  The debt represented by the bonds is
157.19 	not included in computing any debt limitations applicable to the
157.20 	city, and the levy of taxes required by Minnesota Statutes,
157.21 	section 475.61, to pay the principal of and interest on the
157.22 	bonds is not subject to any levy limitation or included in
157.23 	computing or applying any levy limitation applicable to the city.
157.24 		Subd. 5.Termination of taxes. The taxes imposed under
157.25 	subdivisions 1 and 2 expire at the later of 15 years after the
157.26 	imposition of the tax or when the Winona city council determines
157.27 	that sufficient funds have been received from the taxes to
157.28 	prepay or retire at maturity the principal, interest, and
157.29 	premium due on any bonds issued for the projects under
157.30 	subdivision 4.  Any funds remaining after expiration of the
157.31 	taxes and retirement of the bonds may be placed in a capital
157.32 	project fund of the city.  The taxes imposed under subdivisions
157.33 	1 and 2 may expire at an earlier time if the city so determines
157.34 	by ordinance.
157.35 	
EFFECTIVE DATE. This section is effective the day after
157.36 	compliance by the governing body of the city of Winona with
158.1 	Minnesota Statutes, section 645.021, subdivision 3.

158.2 	Sec. 44. CITY OF WORTHINGTON; TAXES AUTHORIZED.
 158.3 		Subdivision 1.Sales and use tax. Notwithstanding
158.4 	Minnesota Statutes, section 477A.016, or any other provision of
158.5 	law, ordinance, or city charter, if approved by the voters
158.6 	pursuant to Minnesota Statutes, section 297A.99, at the next
158.7 	general election, the city of Worthington may impose by
158.8 	ordinance a sales and use tax of up to one-half of one percent
158.9 	for the purpose specified in subdivision 3.  Except as otherwise
158.10 	provided in this section, the provisions of Minnesota Statutes,
158.11 	section 297A.99, govern the imposition, administration,
158.12 	collection, and enforcement of the tax authorized under this
158.13 	subdivision.
158.14 		Subd. 2.Excise tax authorized. Notwithstanding
158.15 	Minnesota Statutes, section 477A.016, or any other provision of
158.16 	law, ordinance, or city charter, the city of Worthington may
158.17 	impose by ordinance, for the purposes specified in subdivision
158.18 	3, an excise tax of up to $20 per motor vehicle, as defined by
158.19 	ordinance, purchased or acquired from any person engaged within
158.20 	the city in the business of selling motor vehicles at retail.
158.21 		Subd. 3.Use of revenues. Revenues received from taxes
158.22 	authorized by subdivisions 1 and 2 must be used by the city to
158.23 	pay the cost of collecting and administering the taxes and to
158.24 	pay for the costs of a community center complex and to make
158.25 	renovations to the Memorial Auditorium.  Authorized expenses
158.26 	include, but are not limited to, acquiring property and paying
158.27 	construction expenses related to these improvements, and paying
158.28 	debt service on bonds or other obligations issued to finance
158.29 	acquisition and construction of these improvements.
158.30 		Subd. 4.Bonding authority. (a) If the tax authorized
158.31 	under subdivision 1 is approved by the voters, the city may
158.32 	issue bonds under Minnesota Statutes, chapter 475, to pay
158.33 	capital and administrative expenses for the improvements
158.34 	described in subdivision 3 in an amount that does not exceed
158.35 	$6,000,000.  An election to approve the bonds under Minnesota
158.36 	Statutes, section 475.58, is not required.
159.1 	(b) The debt represented by the bonds is not included in
159.2 	computing any debt limitation applicable to the city, and any
159.3 	levy of taxes under Minnesota Statutes, section 475.61, to pay
159.4 	principal of and interest on the bonds is not subject to any
159.5 	levy limitation.
159.6 		Subd. 5.Termination of taxes. The taxes imposed under
159.7 	subdivisions 1 and 2 expire at the earlier of (1) ten years, or
159.8 	(2) when the city council determines that the amount of revenue
159.9 	received from the taxes to pay for the projects under
159.10 	subdivision 3 equals or exceeds $6,000,000 plus the additional
159.11 	amount needed to pay the costs related to issuance of bonds
159.12 	under subdivision 4, including interest on the bonds.  Any funds
159.13 	remaining after completion of the project and retirement or
159.14 	redemption of the bonds shall be placed in a capital project
159.15 	fund of the city.  The taxes imposed under subdivisions 1 and 2
159.16 	may expire at an earlier time if the city so determines by
159.17 	ordinance.
159.18 	
EFFECTIVE DATE. This section is effective the day after
159.19 	the governing body of the city of Worthington and its chief
159.20 	clerical officer timely comply with Minnesota Statutes, section
159.21 	645.021, subdivisions 2 and 3.

159.22 	ARTICLE 6
159.23 	SPECIAL TAXES

159.24 	Section 1. Minnesota Statutes 2004, section 287.20,
159.25 	subdivision 2, is amended to read:
159.26 		Subd. 2.Consideration.  (a) "Consideration" means
159.27 	generally the total monetary value that is given in return for a
159.28 	conveyance of real property in this state and includes all
159.29 	lump-sum payments, all prior or future installment payments that
159.30 	are required under the agreement between the parties, and the
159.31 	fair market value of any property taken, or to be taken, in
159.32 	exchange.
159.33 	(b) Consideration does not include the reasonable and
159.34 	lawful amounts of interest paid for the privilege of paying the
159.35 	purchase price in installments and the fair market value of any
159.36 	items of intangible personal property that are conveyed by the
160.1 	taxable instrument.
160.2 	(c) Consideration does not include the amount paid for the
160.3 	personal property located on the real property being conveyed
160.4 	and transferred as a part of the total consideration, except
160.5 	that the amount paid for the personal property located on the
160.6 	real property being conveyed must be included if the real
160.7 	property being conveyed is a one-, two-, or three-unit
160.8 	residential structure.
160.9 	(d) When a conveyance of real property is made pursuant to
160.10 	a contract for deed, the consideration is the price for the real
160.11 	property reflected in the contract; except that, subject to the
160.12 	limitations under section 287.221, if the contract for deed, or
160.13 	other agreement entered into as a condition to the seller
160.14 	executing the contract, requires the property to be improved
160.15 	during the term of the contract and the price of the real
160.16 	property as reflected in the contract does not include the
160.17 	consideration for the required improvements, then the
160.18 	consideration is the price for the real property as reflected in
160.19 	the contract and the consideration for the required improvements
160.20 	added during the term of the contract.
160.21 	(e) "Total consideration" has the same meaning as
160.22 	consideration.
160.23 	(f) "Consideration, exclusive of the value of any lien or
160.24 	encumbrance remaining at the time of sale" or "net
160.25 	consideration" means the amount of consideration as reduced by
160.26 	the amount outstanding under any lien that attached to the real
160.27 	property prior to the time of sale and that is not released or
160.28 	satisfied as a result of the sale.
160.29 	(g) Except in the case of a gift, when the amount of the
160.30 	consideration for a conveyance includes something other than
160.31 	money or promises to pay money, the consideration for that
160.32 	conveyance is rebuttably presumed to equal the fair market value
160.33 	of the real property being conveyed.
160.34 	
EFFECTIVE DATE. This section is effective for deeds that
160.35 	are both executed and recorded after July 31, 2005.

160.36 	Sec. 2. Minnesota Statutes 2004, section 287.20, is
161.1 	amended by adding a subdivision to read:
161.2 		Subd. 3a.Designated transfer. "Designated transfer"
161.3 	means any of the following:
161.4 	(1) a transfer between (i) an entity owned by a sole owner,
161.5 	and (ii) that sole owner;
161.6 	(2) a transfer between (i) an entity in which a husband, a
161.7 	wife, or both are the sole owners, and (ii) the husband, wife,
161.8 	or both;
161.9 	(3) a transfer between (i) an entity with multiple
161.10 	co-owners, and (ii) all of the co-owners, so long as each of the
161.11 	co-owners maintains the same percentage ownership interest in
161.12 	the transferred real property, whether directly or through
161.13 	ownership of a percentage of the entity;
161.14 	(4) a transfer between (i) a revocable trust, and (ii) the
161.15 	grantor or grantors of the revocable trust; or 
161.16 	(5) a transfer of substantially all of the assets of one or
161.17 	more entities pursuant to a reorganization, as defined in
161.18 	section 287.20, subdivision 9.
161.19 	For purposes of this definition of designated transfer, an
161.20 	interest in an entity that is owned, directly or indirectly, by
161.21 	or for another entity shall be considered as being owned
161.22 	proportionately by or for the owners of the other entity under
161.23 	provisions similar to those of section 267(c)(1) and (5) of the
161.24 	Internal Revenue Code of 1986, as amended through December 31,
161.25 	2004.
161.26 	
EFFECTIVE DATE. This section is effective August 1, 2005.

161.27 	Sec. 3. Minnesota Statutes 2004, section 287.20,
161.28 	subdivision 9, is amended to read:
161.29 		Subd. 9.Reorganization.  "Reorganization" means the
161.30 	transfer of substantially all of the assets of a corporation, a
161.31 	limited liability company, or a partnership not in the usual or
161.32 	regular course of business if at the time of the transfer the
161.33 	transfer qualifies as:  (i) a corporate reorganization under
161.34 	section 368(a) of the Internal Revenue Code of 1986, as amended
161.35 	through December 31, 2000 2004; or (ii) a transfer pursuant to
161.36 	the from a partnership to another partnership when the
162.1 	transferee is treated as a continuation of an existing
162.2 	partnership the transferor under section 708 of the Internal
162.3 	Revenue Code of 1986, as amended through December 31, 2000 2004.
162.4 	
EFFECTIVE DATE. This section is effective the day
162.5 	following final enactment.

162.6 	Sec. 4. Minnesota Statutes 2004, section 287.21,
162.7 	subdivision 1, is amended to read:
162.8 		Subdivision 1.Determination of tax.  (a) A tax is
162.9 	imposed on each deed or instrument by which any real property in
162.10 	this state is granted, assigned, transferred, or otherwise
162.11 	conveyed.  The tax applies against the net consideration. For
162.12 	purposes of the tax, the conversion of a corporation to a
162.13 	limited liability company, a limited liability company to a
162.14 	corporation, a partnership to a limited partnership, a limited
162.15 	partnership to another limited partnership or other entity, or a
162.16 	similar conversion of one entity to another does not grant,
162.17 	assign, transfer, or convey real property.
162.18 	(b) The tax is determined in the following manner:  (1)
162.19 	when transfers are made by instruments pursuant to (i)
162.20 	consolidations or mergers, consolidations,or (ii) sales, or
162.21 	transfers of substantially all of the assets of the entities as
162.22 	defined in section 287.20, subdivision 9, pursuant to plans of
162.23 	reorganization designated transfers, the tax is $1.65; (2) when
162.24 	there is no consideration or when the consideration, exclusive
162.25 	of the value of any lien or encumbrance remaining thereon at the
162.26 	time of sale, is $500 or less, the tax is $1.65; or (3) when the
162.27 	consideration, exclusive of the value of any lien or encumbrance
162.28 	remaining at the time of sale, exceeds $500, the tax is .0033 of
162.29 	the net consideration.
162.30 	(c) If, within six months from the date of a designated
162.31 	transfer, an ownership interest in the grantee entity is
162.32 	transferred by an initial owner to any person or entity with the
162.33 	result that the designated transfer would not have been a
162.34 	designated transfer if made to the grantee entity with its
162.35 	subsequent ownership, then a tax is imposed at .0033 of the net
162.36 	consideration for the designated transfer.  If the subsequent
163.1 	transfer of ownership interests was reasonably expected at the
163.2 	time of the designated transfer, the applicable penalty under
163.3 	section 287.31, subdivision 1, must be paid.  The deed tax
163.4 	imposed under this paragraph is due within 30 days of the
163.5 	subsequent transfer that caused the tax to be imposed under this
163.6 	paragraph.  Involuntary transfers of ownership shall not be
163.7 	considered transfers of ownership under this paragraph.  The
163.8 	commissioner may adopt rules defining the types of transfers to
163.9 	be considered involuntary.
163.10 	(d) The tax is due at the time a taxable deed or instrument
163.11 	is presented for recording, except as provided in paragraph
163.12 	(c).  The commissioner may require the tax to be documented in a
163.13 	manner prescribed by the commissioner, and may require that the
163.14 	documentation be attached to and recorded as part of the deed or
163.15 	instrument.  The county recorder or registrar of titles shall
163.16 	accept the attachment for recording as part of the deed or
163.17 	instrument and may not require, as a condition of recording a
163.18 	deed or instrument, evidence that a transfer is a designated
163.19 	transfer in addition to that required by the commissioner.  Such
163.20 	an attachment shall not, however, provide actual or constructive
163.21 	notice of the information contained therein for purposes of
163.22 	determining any interest in the real property.  The commissioner
163.23 	shall prescribe the manner in which the tax due under paragraph
163.24 	(c) is to be paid and may require grantees of designated
163.25 	transfers to file with the commissioner subsequent statements
163.26 	verifying that the tax provided under paragraph (c) does not
163.27 	apply.
163.28 	
EFFECTIVE DATE. This section is effective for deeds that
163.29 	are both executed and recorded after July 31, 2005.

163.30 	Sec. 5. Minnesota Statutes 2004, section 295.50, is
163.31 	amended by adding a subdivision to read:
163.32 		Subd. 1a.Blood components. "Blood components" means the
163.33 	parts of the blood that are separated from blood by physical or
163.34 	mechanical means and are intended for transfusion.  Blood
163.35 	components do not include blood derivatives.
163.36 	
EFFECTIVE DATE. This section is effective for gross
164.1 	revenues received after December 31, 2004.

164.2 	Sec. 6. Minnesota Statutes 2004, section 295.50,
164.3 	subdivision 3, is amended to read:
164.4 		Subd. 3.Gross revenues.  "Gross revenues" are total
164.5 	amounts received in money or otherwise by:
164.6 	(1) a hospital for patient services;
164.7 	(2) a surgical center for patient services;
164.8 	(3) a health care provider, other than a staff model health
164.9 	carrier, for patient services;
164.10 	(4) a wholesale drug distributor for sale or distribution
164.11 	of legend drugs that are delivered in Minnesota by the wholesale
164.12 	drug distributor, by common carrier, or by mail, unless the
164.13 	legend drugs are delivered to another wholesale drug distributor
164.14 	who sells legend drugs exclusively at wholesale.  Legend drugs
164.15 	do not include nutritional products as defined in Minnesota
164.16 	Rules, part 9505.0325, and blood and blood components; and
164.17 	(5) a staff model health plan company as gross premiums for
164.18 	enrollees, co-payments, deductibles, coinsurance, and fees for
164.19 	patient services.
164.20 	
EFFECTIVE DATE. This section is effective for gross
164.21 	revenues received after December 31, 2004.

164.22 	Sec. 7. Minnesota Statutes 2004, section 295.52,
164.23 	subdivision 4, is amended to read:
164.24 		Subd. 4.Use tax; prescription drugs.  (a) A person that
164.25 	receives prescription drugs for resale or use in Minnesota,
164.26 	other than from a wholesale drug distributor that is subject to
164.27 	tax under subdivision 3, is subject to a tax equal to the price
164.28 	paid to the wholesale drug distributor multiplied by the tax
164.29 	percentage specified in this section.  Liability for the tax is
164.30 	incurred when prescription drugs are received or delivered in
164.31 	Minnesota by the person.
164.32 	(b) A person that receives prescription drugs for use in
164.33 	Minnesota from a nonresident pharmacy required to be registered
164.34 	under section 151.19 is subject to a tax equal to the price paid
164.35 	by the nonresident pharmacy to the wholesale drug distributor or
164.36 	the price received by the nonresident pharmacy, whichever is
165.1 	lower, multiplied by the tax percentage specified in this
165.2 	section.  Liability for the tax is incurred when prescription
165.3 	drugs are received in Minnesota by the person.
165.4 	(c) A tax imposed under this subdivision does not apply to
165.5 	purchases by an individual for personal consumption.
165.6 	
EFFECTIVE DATE. This section is effective for purchases
165.7 	made after July 31, 2005.

165.8 	Sec. 8. Minnesota Statutes 2004, section 295.53,
165.9 	subdivision 1, is amended to read:
165.10 		Subdivision 1.Exemptions.  (a) The following payments
165.11 	are excluded from the gross revenues subject to the hospital,
165.12 	surgical center, or health care provider taxes under sections
165.13 	295.50 to 295.59:
165.14 	(1) payments received for services provided under the
165.15 	Medicare program, including payments received from the
165.16 	government, and organizations governed by sections 1833 and 1876
165.17 	of title XVIII of the federal Social Security Act, United States
165.18 	Code, title 42, section 1395, and enrollee deductibles,
165.19 	coinsurance, and co-payments, whether paid by the Medicare
165.20 	enrollee or by a Medicare supplemental coverage as defined in
165.21 	section 62A.011, subdivision 3, clause (10), or by Medicaid
165.22 	payments under title XIX of the federal Social Security Act.
165.23 	Payments for services not covered by Medicare are taxable;
165.24 	(2) payments received for home health care services;
165.25 	(3) payments received from hospitals or surgical centers
165.26 	for goods and services on which liability for tax is imposed
165.27 	under section 295.52 or the source of funds for the payment is
165.28 	exempt under clause (1), (7), (10), or (14);
165.29 	(4) payments received from health care providers for goods
165.30 	and services on which liability for tax is imposed under this
165.31 	chapter or the source of funds for the payment is exempt under
165.32 	clause (1), (7), (10), or (14);
165.33 	(5) amounts paid for legend drugs, other than nutritional
165.34 	products and blood and blood components, to a wholesale drug
165.35 	distributor who is subject to tax under section 295.52,
165.36 	subdivision 3, reduced by reimbursements received for legend
166.1 	drugs otherwise exempt under this chapter;
166.2 	(6) payments received by a health care provider or the
166.3 	wholly owned subsidiary of a health care provider for care
166.4 	provided outside Minnesota;
166.5 	(7) payments received from the chemical dependency fund
166.6 	under chapter 254B;
166.7 	(8) payments received in the nature of charitable donations
166.8 	that are not designated for providing patient services to a
166.9 	specific individual or group;
166.10 	(9) payments received for providing patient services
166.11 	incurred through a formal program of health care research
166.12 	conducted in conformity with federal regulations governing
166.13 	research on human subjects.  Payments received from patients or
166.14 	from other persons paying on behalf of the patients are subject
166.15 	to tax;
166.16 	(10) payments received from any governmental agency for
166.17 	services benefiting the public, not including payments made by
166.18 	the government in its capacity as an employer or insurer or
166.19 	payments made by the government for services provided under
166.20 	general assistance medical care, the MinnesotaCare program, or
166.21 	the medical assistance program governed by title XIX of the
166.22 	federal Social Security Act, United States Code, title 42,
166.23 	sections 1396 to 1396v;
166.24 	(11) government payments received by the commissioner of
166.25 	human services for state-operated services;
166.26 	(12) payments received by a health care provider for
166.27 	hearing aids and related equipment or prescription eyewear
166.28 	delivered outside of Minnesota;
166.29 	(13) payments received by an educational institution from
166.30 	student tuition, student activity fees, health care service
166.31 	fees, government appropriations, donations, or grants, and for
166.32 	services identified in and provided under an individualized
166.33 	education plan as defined in section 256B.0625 or Code of
166.34 	Federal Regulations, chapter 34, section 300.340(a).  Fee for
166.35 	service payments and payments for extended coverage are taxable;
166.36 	and 
167.1 	(14) payments received under the federal Employees Health
167.2 	Benefits Act, United States Code, title 5, section 8909(f), as
167.3 	amended by the Omnibus Reconciliation Act of 1990. Enrollee
167.4 	deductibles, coinsurance, and co-payments are subject to tax;
167.5 	and 
167.6 	(15) payments received under the federal Tricare program,
167.7 	Code of Federal Regulations, title 32, section 199.17(a)(7).
167.8 	Enrollee deductibles, coinsurance, and co-payments are subject
167.9 	to tax.
167.10 	(b) Payments received by wholesale drug distributors for
167.11 	legend drugs sold directly to veterinarians or veterinary bulk
167.12 	purchasing organizations are excluded from the gross revenues
167.13 	subject to the wholesale drug distributor tax under sections
167.14 	295.50 to 295.59.
167.15 	
EFFECTIVE DATE. The change made to paragraph (a), clause
167.16 	(5), of this section is effective for amounts paid for blood and
167.17 	blood components after December 31, 2004.  The change made to
167.18 	paragraph (a), clause (14), of this section is effective for
167.19 	enrollee deductibles, coinsurance, and co-payments received
167.20 	under the federal Employees Health Benefits Act on or after the
167.21 	day following final enactment.  Paragraph (a), clause (15), is
167.22 	effective for gross revenues received under the federal Tricare
167.23 	program after December 31, 2004.

167.24 	Sec. 9. [295.75] LIQUOR GROSS RECEIPTS TAX.
167.25 		Subdivision 1.Definitions. (a) For purposes of this
167.26 	section, the following terms have the meanings given.
167.27 	(b) "Commissioner" means the commissioner of revenue.
167.28 	(c) "Gross receipts" means the total amount received, in
167.29 	money or by barter or exchange, for all liquor sales at retail
167.30 	as measured by the sales price, but does not include any taxes
167.31 	imposed directly on the consumer that are separately stated on
167.32 	the invoice, bill of sale, or similar document given to the
167.33 	purchaser.
167.34 	(d) "Liquor" means:
167.35 	(1) intoxicating liquor, as defined in section 340A.101,
167.36 	subdivision 14;
168.1 	(2) beverage containing intoxicating liquor; and 
168.2 	(3) 3.2 percent malt liquor, as defined in section
168.3 	340A.101, subdivision 19, when sold at an on-sale or off-sale
168.4 	municipal liquor store or other establishment licensed to sell
168.5 	any type of intoxicating liquor.
168.6 	(e) "Liquor retailer" means a retailer that sells liquor.
168.7 	(f) "Retail sale" has the meaning given in section 297A.61,
168.8 	subdivision 4.
168.9 		Subd. 2.Gross receipts tax imposed. A tax is imposed on
168.10 	each liquor retailer equal to 2.5 percent of gross receipts from
168.11 	retail sales in Minnesota of liquor.
168.12 		Subd. 3.Use tax imposed; credit for taxes paid. (a) A
168.13 	person that receives liquor for use or storage in Minnesota,
168.14 	other than from a liquor retailer that paid the tax under
168.15 	subdivision 2, is subject to tax at the rate imposed under
168.16 	subdivision 2.  Liability for the tax is incurred when the
168.17 	person has possession of the liquor in Minnesota.  The tax must
168.18 	be remitted to the commissioner in the same manner prescribed
168.19 	for the taxes imposed under chapter 297A.
168.20 	(b) A person that has paid taxes to another jurisdiction on
168.21 	the same transaction and is subject to tax under this section is
168.22 	entitled to a credit for the tax legally due and paid to another
168.23 	jurisdiction to the extent of the lesser of (1) the tax actually
168.24 	paid to the other jurisdiction, or (2) the amount of tax imposed
168.25 	by Minnesota on the transaction subject to tax in the other
168.26 	jurisdiction.
168.27 		Subd. 4.Tax collection required. A liquor retailer with
168.28 	nexus in Minnesota, who is not subject to tax under subdivision
168.29 	2, is required to collect the tax imposed under subdivision 3
168.30 	from the purchaser of the liquor and give the purchaser a
168.31 	receipt for the tax paid.  The tax collected must be remitted to
168.32 	the commissioner in the same manner prescribed for the taxes
168.33 	imposed under chapter 297A.
168.34 		Subd. 5.Taxes paid to another jurisdiction; credit. A
168.35 	liquor retailer that has paid taxes to another jurisdiction
168.36 	measured by gross receipts and is subject to tax under this
169.1 	section on the same gross receipts is entitled to a credit for
169.2 	the tax legally due and paid to another jurisdiction to the
169.3 	extent of the lesser of (1) the tax actually paid to the other
169.4 	jurisdiction, or (2) the amount of tax imposed by Minnesota on
169.5 	the gross receipts subject to tax in the other taxing
169.6 	jurisdictions.
169.7 		Subd. 6.Exemptions. All of the exemptions applicable to
169.8 	the taxes imposed under chapter 297A are applicable to the taxes
169.9 	imposed under this section.
169.10 		Subd. 7.Sourcing of sales. All of the provisions of
169.11 	section 297A.668 apply to the taxes imposed by this section.
169.12 		Subd. 8.Payment; reporting. A liquor retailer shall
169.13 	report the tax on a return prescribed by the commissioner of
169.14 	revenue, and shall remit the tax with the return.  The return
169.15 	and the tax must be filed and paid using the filing cycle and
169.16 	due dates provided for taxes imposed under chapter 297A.
169.17 		Subd. 9.Administration. Unless specifically provided
169.18 	otherwise by this section, the audit, assessment, refund,
169.19 	penalty, interest, enforcement, collection remedies, appeal, and
169.20 	administrative provisions of chapters 270 and 289A that are
169.21 	applicable to taxes imposed under chapter 297A apply to taxes
169.22 	imposed under this section.
169.23 		Subd. 10.Interest on overpayments. Interest must be
169.24 	paid on an overpayment refunded or credited to the taxpayer from
169.25 	the date of payment of the tax until the date the refund is paid
169.26 	or credited.  For purposes of this subdivision, the date of
169.27 	payment is the due date of the return or the date of actual
169.28 	payment of the tax, whichever is later.
169.29 		Subd. 11.Deposit of revenues. The commissioner shall
169.30 	deposit all revenues, including penalties and interest, derived
169.31 	from the tax imposed by this section in the general fund.
169.32 	
EFFECTIVE DATE. This section is effective for sales and
169.33 	purchases occurring on or after January 1, 2006.

169.34 	Sec. 10. Minnesota Statutes 2004, section 296A.09, is
169.35 	amended by adding a subdivision to read:
169.36 		Subd. 6.Exemptions. The provisions of subdivisions 1
170.1 	and 2 do not apply to aviation gasoline or jet fuel purchased by
170.2 	an ambulance service licensed under chapter 144E.
170.3 	
EFFECTIVE DATE. This section is effective for purchases
170.4 	made on or after July 1, 2005.

170.5 	Sec. 11. Minnesota Statutes 2004, section 297F.01, is
170.6 	amended by adding a subdivision to read:
170.7 		Subd. 10a.Out-of-state retailer. "Out-of-state retailer"
170.8 	means a person engaged outside of this state in the business of
170.9 	selling, or offering to sell, cigarettes or tobacco products to
170.10 	consumers located in this state.
170.11 	
EFFECTIVE DATE. This section is effective the day
170.12 	following final enactment.

170.13 	Sec. 12. [297F.031] REGISTRATION REQUIREMENT.
170.14 	Prior to making delivery sales or shipping cigarettes or
170.15 	tobacco products in connection with any sales, an out-of-state
170.16 	retailer shall file with the Department of Revenue a statement
170.17 	setting forth the out-of-state retailer's name, trade name, and
170.18 	the address of the out-of-state retailer's principal place of
170.19 	business and any other place of business.

170.20 	EFFECTIVE DATE. This section is effective August 1, 2005.

170.21 	Sec. 13. Minnesota Statutes 2004, section 297F.09, is
170.22 	amended by adding a subdivision to read:
170.23 		Subd. 4a.Reporting requirements. No later than the 18th
170.24 	day of each calendar month, an out-of-state retailer that has
170.25 	made a delivery of cigarettes or tobacco products or shipped or
170.26 	delivered cigarettes or tobacco products into the state in a
170.27 	delivery sale in the previous calendar month shall file with the
170.28 	Department of Revenue reports in the form and in the manner
170.29 	prescribed by the commissioner of revenue that provides for each
170.30 	delivery sale, the name and address of the purchaser and the
170.31 	brand or brands and quantity of cigarettes or tobacco products
170.32 	sold.  A tobacco retailer that meets the requirements of United
170.33 	States Code, title 15, section 375 et seq. satisfies the
170.34 	requirements of this subdivision.
170.35 	
EFFECTIVE DATE. This section is effective August 1, 2005.

170.36 	Sec. 14. Minnesota Statutes 2004, section 297F.10,
171.1 	subdivision 1, is amended to read:
171.2 		Subdivision 1.Tax and use tax on cigarettes.  Revenue
171.3 	received from cigarette taxes, as well as related penalties,
171.4 	interest, license fees, and miscellaneous sources of revenue
171.5 	shall be deposited by the commissioner in the state treasury and
171.6 	credited as follows:
171.7 	(1) the revenue produced by 3.25 mills of the tax on
171.8 	cigarettes weighing not more than three pounds a thousand and
171.9 	6.5 mills of the tax on cigarettes weighing more than three
171.10 	pounds a thousand $22,220,000 for fiscal year 2006 and
171.11 	$22,250,000 for fiscal year 2007 and each year thereafter must
171.12 	be credited to the Academic Health Center special revenue fund
171.13 	hereby created and is annually appropriated to the Board of
171.14 	Regents at the University of Minnesota for Academic Health
171.15 	Center funding at the University of Minnesota; and
171.16 	(2) the revenue produced by 1.25 mills of the tax on
171.17 	cigarettes weighing not more than three pounds a thousand and
171.18 	2.5 mills of the tax on cigarettes weighing more than three
171.19 	pounds a thousand $8,553,000 for fiscal year 2006 and $8,550,000
171.20 	for fiscal year 2007 and each year thereafter must be credited
171.21 	to the medical education and research costs account hereby
171.22 	created in the special revenue fund and is annually appropriated
171.23 	to the commissioner of health for distribution under section
171.24 	62J.692, subdivision 4; and
171.25 	(3) the balance of the revenues derived from taxes,
171.26 	penalties, and interest (under this chapter) and from license
171.27 	fees and miscellaneous sources of revenue shall be credited to
171.28 	the general fund.
171.29 	
EFFECTIVE DATE. This section is effective for revenue
171.30 	received on or after June 30, 2005.

171.31 	Sec. 15. [297F.25] CIGARETTE SALES TAX.
171.32 		Subdivision 1.Imposition. A tax is imposed on
171.33 	distributors on the sale of cigarettes by a cigarette
171.34 	distributor to a retailer or cigarette subjobber for resale in
171.35 	this state.  The tax is equal to 6.5 percent of the weighted
171.36 	average retail price.  The weighted average retail price must be
172.1 	expressed in cents per pack when rounded to the nearest
172.2 	one-tenth of a cent.  The weighted average retail price must be
172.3 	determined annually, with new rates published by May 1, and
172.4 	effective for sales on or after August 1.  The weighted average
172.5 	retail price must be established by surveying cigarette
172.6 	retailers statewide in a manner and time determined by the
172.7 	commissioner.  The determination of the commissioner pursuant to
172.8 	this subdivision is not a "rule" and is not subject to the
172.9 	Administrative Procedure Act contained in chapter 14.  As of
172.10 	August 1, 2005, the tax is 25.5 cents per pack of 20 cigarettes.
172.11 	For packs of cigarettes with other than 20 cigarettes, the tax
172.12 	must be adjusted proportionally.
172.13 		Subd. 2.Payment. Each taxpayer must remit payments of
172.14 	the taxes to the commissioner on the same dates prescribed under
172.15 	section 297F.09, subdivision 1, for cigarette tax returns,
172.16 	including the accelerated remittance of the June liability.
172.17 		Subd. 3.Return. A taxpayer must file a return with the
172.18 	commissioner on the same dates prescribed under section 297F.09,
172.19 	subdivision 1, for cigarette tax returns.  Notwithstanding any
172.20 	other provisions of this chapter, the tax due on the return is
172.21 	based upon actual stamps purchased during the reporting period.
172.22 		Subd. 4.Form of return. The return must contain the
172.23 	information and be in the form prescribed by the commissioner.
172.24 		Subd. 5.Tax as debt. The tax that is required to be
172.25 	paid by the distributor is a debt from the retailer or cigarette
172.26 	subjobber to the distributor recoverable at law in the same
172.27 	manner as other debts.  A cigarette retailer or subjobber must
172.28 	pay the tax imposed under subdivision 1 to the distributor
172.29 	before the 12th day of the month following the month in which
172.30 	the cigarettes were purchased from the distributor.
172.31 		Subd. 6.Sales tax stamp. Payment of the tax imposed
172.32 	under section 297F.05 and by this section must be evidenced by a
172.33 	dual-purpose single stamp affixed to each package.
172.34 		Subd. 7.Administration. The stamping, audit,
172.35 	assessment, interest, penalty, appeal, refund, and collection
172.36 	provisions applicable to the taxes imposed under this chapter
173.1 	apply to taxes imposed under this section.
173.2 		Subd. 8.Deposit of revenues. Notwithstanding the
173.3 	provisions of section 297F.10, the commissioner shall deposit
173.4 	all revenues, including penalties and interest, derived from the
173.5 	tax imposed by this section, in the general fund.
173.6 	
EFFECTIVE DATE. This section is effective for all sales
173.7 	made on or after August 1, 2005.

173.8 	Sec. 16. Minnesota Statutes 2004, section 297I.01, is
173.9 	amended by adding a subdivision to read:
173.10 		Subd. 6a.Direct business. (a) "Direct business" means
173.11 	all insurance provided by an insurance company or its agents,
173.12 	and specifically includes stop-loss insurance purchased in
173.13 	connection with a self-insurance plan for employee health
173.14 	benefits or for other purposes, but excludes:
173.15 	(1) reinsurance in which an insurance company assumes the
173.16 	liability of another insurance company; and 
173.17 	(2) self-insurance.
173.18 	(b) For purposes of this subdivision, an insurance company
173.19 	includes a nonprofit health service corporation, health
173.20 	maintenance organization, and community integrated service
173.21 	network.
173.22 	
EFFECTIVE DATE. This section is effective for insurance
173.23 	premiums received after December 31, 2005.

173.24 	Sec. 17. Minnesota Statutes 2004, section 297I.01,
173.25 	subdivision 13a, as added by Laws 2005, chapter 151, article 8,
173.26 	section 16, is amended to read:
173.27 		Subd. 13a.Reinsurance. "Reinsurance" is insurance
173.28 	whereby an insurance company, for a consideration, agrees to
173.29 	indemnify another insurance company as defined under section
173.30 	297I.01, subdivisions 5 and 6a, paragraph (b), to the extent
173.31 	taxable under section 297I.05,against all or part of the loss
173.32 	which the latter may sustain under the policy or policies which
173.33 	it has issued.
173.34 	
EFFECTIVE DATE. This section is effective June 3, 2005.

173.35 	Sec. 18. Minnesota Statutes 2004, section 297I.05,
173.36 	subdivision 4, is amended to read:
174.1 		Subd. 4.Mutual property and casualty companies with
174.2 	total assets less than $1,600,000,000 on december 31, 1989.  A
174.3 	tax is imposed on:
174.4 	(1) mutual insurance companies that sell both property and
174.5 	casualty companies insurance that had total assets greater than
174.6 	$5,000,000 at the end of the calendar year but that had total
174.7 	assets less than $1,600,000,000 on December 31, 1989; and 
174.8 	(2) a mutual insurance company created pursuant to Laws
174.9 	1983, chapter 287, article 2, that sells only casualty insurance.
174.10 	The rate of tax is equal to:
174.11 	(1) two percent of gross premiums less return premiums on
174.12 	all direct business received by the insurer or agents of the
174.13 	insurer in Minnesota for life insurance, in cash or otherwise,
174.14 	during the year; and 
174.15 	(2) 1.26 percent of gross premiums less return premiums on
174.16 	all other direct business received by the insurer or agents of
174.17 	the insurer in Minnesota, in cash or otherwise, during the year.
174.18 	
EFFECTIVE DATE. This section is effective for premiums
174.19 	received after December 31, 2005.

174.20 	Sec. 19. Minnesota Statutes 2004, section 297I.05, is
174.21 	amended by adding a subdivision to read:
174.22 		Subd. 14.Life insurance. A tax is imposed on life
174.23 	insurance.  The rate of tax equals a percentage of gross
174.24 	premiums less return premiums on all direct business received by
174.25 	the insurer or agents of the insurer in Minnesota for life
174.26 	insurance, in cash or otherwise, during the year.  For premiums
174.27 	received after December 31, 2005, but before January 1, 2007,
174.28 	the rate of tax is 1.875 percent.  For premiums received after
174.29 	December 31, 2006, but before January 1, 2008, the rate of tax
174.30 	is 1.75 percent.  For premiums received after December 31, 2007,
174.31 	but before January 1, 2009, the rate of tax is 1.625 percent.
174.32 	For premiums received after December 31, 2008, the rate of tax
174.33 	is 1.5 percent.
174.34 	
EFFECTIVE DATE. This section is effective for premiums
174.35 	received after December 31, 2005.

174.36 	Sec. 20. [325F.781] REQUIREMENTS; TOBACCO PRODUCT
175.1 	DELIVERY SALES.
175.2 		Subdivision 1.Definitions. (a) For purposes of this
175.3 	section, the following terms have the meanings given, unless the
175.4 	language or context clearly provides otherwise.
175.5 	(b) "Consumer" means an individual who purchases, receives,
175.6 	or possesses tobacco products for personal consumption and not
175.7 	for resale.
175.8 	(c) "Delivery sale" means:
175.9 	(1) a sale of tobacco products to a consumer in this state
175.10 	when:
175.11 	(i) the purchaser submits the order for the sale by means
175.12 	of a telephonic or other method of voice transmission, the mail
175.13 	or any other delivery service, or the Internet or other on-line
175.14 	service; or 
175.15 	(ii) the tobacco products are delivered by use of the mail
175.16 	or other delivery service; or 
175.17 	(2) a sale of tobacco products that satisfies the criteria
175.18 	in clause (1), item (i), regardless of whether the seller is
175.19 	located inside or outside of the state.
175.20 	A sale of tobacco products to an individual in this state
175.21 	must be treated as a sale to a consumer, unless the individual
175.22 	is licensed as a distributor or retailer of tobacco products.
175.23 	(d) "Delivery service" means a person, including the United
175.24 	States Postal Service, that is engaged in the commercial
175.25 	delivery of letters, packages, or other containers.
175.26 	(e) "Distributor" means a person, whether located inside or
175.27 	outside of this state, other than a retailer, who sells or
175.28 	distributes tobacco products in the state.  Distributor does not
175.29 	include a tobacco products manufacturer, export warehouse
175.30 	proprietor, or importer with a valid permit under United States
175.31 	Code, title 26, section 5712 (1997), if the person sells or
175.32 	distributes tobacco products in this state only to distributors
175.33 	who hold valid and current licenses under the laws of a state,
175.34 	or to an export warehouse proprietor or another manufacturer.
175.35 	Distributor does not include a common or contract carrier that
175.36 	is transporting tobacco products under a proper bill of lading
176.1 	or freight bill that states the quantity, source, and
176.2 	destination of tobacco products, or a person who ships tobacco
176.3 	products through this state by common or contract carrier under
176.4 	a bill of lading or freight bill.
176.5 	(f) "Retailer" means a person, whether located inside or
176.6 	outside this state, who sells or distributes tobacco products to
176.7 	a consumer in this state.
176.8 	(g) "Tobacco products" means:
176.9 	(1) cigarettes, as defined in section 297F.01, subdivision
176.10 	3; and 
176.11 	(2) smokeless tobacco as defined in section 325F.76.
176.12 		Subd. 2.Requirements for accepting order for delivery
176.13 	sale. (a) This subdivision applies to acceptance of an order
176.14 	for a delivery sale of tobacco products.
176.15 	(b) When accepting the first order for a delivery sale from
176.16 	a consumer, the tobacco retailer shall obtain the following
176.17 	information from the person placing the order:
176.18 	(1) a copy of a valid government-issued document that
176.19 	provides the person's name, current address, photograph, and
176.20 	date of birth; and 
176.21 	(2) an original written statement signed by the person
176.22 	documenting that the person:
176.23 	(i) is of legal age to purchase tobacco products in the
176.24 	state;
176.25 	(ii) has made a choice whether to receive mailings from a
176.26 	tobacco retailer;
176.27 	(iii) understands that providing false information may be a
176.28 	violation of law; and 
176.29 	(iv) understands that it is a violation of law to purchase
176.30 	tobacco products for subsequent resale or for delivery to
176.31 	persons who are under the legal age to purchase tobacco products.
176.32 	(c) If an order is made as a result of advertisement over
176.33 	the Internet, the tobacco retailer shall request the e-mail
176.34 	address of the purchaser and shall receive payment by credit
176.35 	card or check prior to shipping.
176.36 	(d) Prior to shipping the tobacco products, the tobacco
177.1 	retailer shall verify the information provided under paragraph
177.2 	(b) against a commercially available database.  Any such
177.3 	database or databases may also include age and identity
177.4 	information from other government or validated commercial
177.5 	sources, if that additional information is regularly used by
177.6 	government and businesses for the purpose of identity
177.7 	verification and authentication, and if the additional
177.8 	information is used only to supplement and not to replace the
177.9 	government-issued identification data in the age and identity
177.10 	verification process.
177.11 		Subd. 3.Requirements for shipping a delivery sale. (a)
177.12 	This subdivision applies to a tobacco retailer shipping tobacco
177.13 	products pursuant to a delivery sale.
177.14 	(b) The tobacco retailer shall clearly mark the outside of
177.15 	the package of tobacco products to be shipped "tobacco products -
177.16 	adult signature required" and to show the name of the tobacco
177.17 	retailer.
177.18 	(c) The tobacco retailer shall utilize a delivery service
177.19 	that imposes the following requirements:
177.20 	(1) an adult must sign for the delivery; and 
177.21 	(2) the person signing for the delivery must show valid
177.22 	government-issued identification that contains a photograph of
177.23 	the person signing for the delivery and indicates that the
177.24 	person signing for the delivery is of legal age to purchase
177.25 	tobacco products and resides at the delivery address.
177.26 	(d) The retailer must provide delivery instructions that
177.27 	clearly indicate the requirements of this subdivision and must
177.28 	declare that state law requires compliance with the requirements.
177.29 	(e) No criminal penalty may be imposed on a person for a
177.30 	violation of this section other than a violation described in
177.31 	paragraph (f) or (g).  Whenever it appears to the commissioner
177.32 	that any person has engaged in any act or practice constituting
177.33 	a violation of this section, and the violation is not within two
177.34 	years of any previous violation of this section, the
177.35 	commissioner shall issue and cause to be served upon the person
177.36 	an order requiring the person to cease and desist from violating
178.1 	this section.  The order must give reasonable notice of the
178.2 	rights of the person to request a hearing and must state the
178.3 	reason for the entry of the order.  Unless otherwise agreed
178.4 	between the parties, a hearing shall be held not later than
178.5 	seven days after the request for the hearing is received by the
178.6 	commissioner after which and within 20 days after the receipt of
178.7 	the administrative law judge's report and subsequent exceptions
178.8 	and argument, the commissioner shall issue an order vacating the
178.9 	cease and desist order, modifying it, or making it permanent as
178.10 	the facts require.  If no hearing is requested within 30 days of
178.11 	the service of the order, the order becomes final and remains in
178.12 	effect until modified or vacated by the commissioner.  All
178.13 	hearings shall be conducted in accordance with the provisions of
178.14 	chapter 14.  If the person to whom a cease and desist order is
178.15 	issued fails to appear at the hearing after being duly notified,
178.16 	the person shall be deemed in default, and the proceeding may be
178.17 	determined against the person upon consideration of the cease
178.18 	and desist order, the allegations of which may be deemed to be
178.19 	true.
178.20 	(f) Any person who violates this section within two years
178.21 	of a violation for which a cease and desist order was issued
178.22 	under paragraph (e), is guilty of a misdemeanor.
178.23 	(g) Any person who commits a third or subsequent violation
178.24 	of this section, including a violation for which a cease and
178.25 	desist order was issued under paragraph (c), within any
178.26 	subsequent two-year period is guilty of a gross misdemeanor.
178.27 		Subd. 4.Common carriers. This section may not be
178.28 	construed as imposing liability upon any common carrier, or
178.29 	officers or employees of the common carrier, when acting within
178.30 	the scope of business of the common carrier.
178.31 		Subd. 5.Registration requirement. Prior to making
178.32 	delivery sales or shipping tobacco products in connection with
178.33 	any sales, an out-of-state retailer must meet the requirements
178.34 	of section 297F.031.
178.35 		Subd. 6.Collection of taxes. (a) Prior to shipping any
178.36 	tobacco products to a purchaser in this state, the out-of-state
179.1 	retailer shall comply with all requirements of chapter 297F and
179.2 	shall ensure that all state excise taxes and fees that apply to
179.3 	such tobacco products have been collected and paid to the state
179.4 	and that all related state excise tax stamps or other indicators
179.5 	of state excise tax payment have been properly affixed to those
179.6 	tobacco products.
179.7 	(b) In addition to any penalties under chapter 297F, a
179.8 	distributor who fails to pay any tax due according to paragraph
179.9 	(a) shall pay, in addition to any other penalty, a penalty of 50
179.10 	percent of the tax due but unpaid.
179.11 		Subd. 7.Application of state laws. All state laws that
179.12 	apply to in-state tobacco product retailers shall apply to
179.13 	Internet and mail-order sellers that sell into this state.
179.14 		Subd. 8.Forfeiture. Any tobacco product sold or
179.15 	attempted to be sold in a delivery sale that does not meet the
179.16 	requirements of this section is deemed to be contraband and is
179.17 	subject to forfeiture in the same manner as and in accordance
179.18 	with the provisions of section 297F.21.
179.19 		Subd. 9.Civil penalties. A tobacco retailer or
179.20 	distributor who violates this section or rules adopted under
179.21 	this section is subject to the following fines:
179.22 	(1) for the first violation, a fine of not more than
179.23 	$1,000; and 
179.24 	(2) for the second and any subsequent violation, a fine of
179.25 	not more than $5,000.
179.26 		Subd. 10.Enforcement. The attorney general may bring an
179.27 	action to enforce this section and may seek injunctive relief,
179.28 	including a preliminary or final injunction, and fines,
179.29 	penalties, and equitable relief and may seek to prevent or
179.30 	restrain actions in violation of this section by any person or
179.31 	any person controlling such person.  In addition, a violation of
179.32 	this section is a violation of the Unlawful Trade Practices Act,
179.33 	sections 325D.09 to 325D.16.
179.34 	
EFFECTIVE DATE. This section is effective August 1, 2005,
179.35 	except that the criminal penalties in subdivision 3 and the
179.36 	civil penalties in subdivision 9 are effective for violations
180.1 	occurring on or after August 1, 2005.

180.2 	Sec. 21. FLOOR STOCKS TAX.
 180.3 		Subdivision 1.Cigarettes. A floor stocks cigarette
180.4 	sales tax is imposed on every person engaged in the business in
180.5 	this state as a distributor, retailer, subjobber, vendor,
180.6 	manufacturer, or manufacturer's representative of cigarettes, on
180.7 	the stamped cigarettes and unaffixed stamps in the person's
180.8 	possession or under the person's control at 12:01 a.m. on August
180.9 	1, 2005.  The tax is imposed at the rate of 25.5 cents per pack
180.10 	of 20 cigarettes.  For packs of cigarettes with other than 20
180.11 	cigarettes, the tax shall be adjusted proportionally.
180.12 	Each distributor, by August 10, 2005, shall file a return
180.13 	with the commissioner, in the form the commissioner prescribes,
180.14 	showing the stamped cigarettes and unaffixed stamps on hand at
180.15 	12:01 a.m. on August 1, 2005, and the amount of tax due on the
180.16 	cigarettes and unaffixed stamps.  The tax imposed by this
180.17 	section is due and payable by September 7, 2005, and after that
180.18 	date bears interest at the rate of one percent a month.
180.19 	Each retailer, subjobber, vendor, manufacturer, or
180.20 	manufacturer's representative, by August 10, 2005, shall file a
180.21 	return with the commissioner, in the form the commissioner
180.22 	prescribes, showing the cigarettes on hand at 12:01 a.m. on
180.23 	August 1, 2005, and the amount of tax due on the cigarettes.
180.24 	The tax imposed by this section is due and payable by September
180.25 	7, 2005, and after that date bears interest at the rate of one
180.26 	percent a month.
180.27 		Subd. 2.Audit and enforcement. The tax imposed by this
180.28 	section is subject to the audit, assessment, penalty, and
180.29 	collection provisions applicable to the taxes imposed under
180.30 	Minnesota Statutes, chapter 297F.  The commissioner may require
180.31 	a distributor to receive and maintain copies of floor stocks tax
180.32 	returns filed by all persons requesting a credit for returned
180.33 	cigarettes.
180.34 		Subd. 3.Deposit of proceeds. The revenue from the tax
180.35 	imposed under this section shall be deposited by the
180.36 	commissioner in the state treasury and credited to the general
181.1 	fund.
181.2 	
EFFECTIVE DATE. This section is effective August 1, 2005.

181.3 	ARTICLE 7
181.4 	ECONOMIC DEVELOPMENT

181.5 	Section 1. Minnesota Statutes 2004, section 116J.993, is
181.6 	amended by adding a subdivision to read:
181.7 		Subd. 8.Residence. "Residence" means the place where an
181.8 	individual has established a permanent home from which the
181.9 	individual has no present intention of moving.
181.10 	
EFFECTIVE DATE. This section is effective August 1, 2005.

181.11 	Sec. 2. Minnesota Statutes 2004, section 116J.994,
181.12 	subdivision 4, is amended to read:
181.13 		Subd. 4.Wage and job goals.  The subsidy agreement, in
181.14 	addition to any other goals, must include:  (1) goals for the
181.15 	number of jobs created, which may include separate goals for the
181.16 	number of part-time or full-time jobs, or, in cases where job
181.17 	loss is specific and demonstrable, goals for the number of jobs
181.18 	retained; (2) wage goals for any jobs created or retained; and
181.19 	(3) wage goals for any jobs to be enhanced through increased
181.20 	wages.  After a public hearing, if the creation or retention of
181.21 	jobs is determined not to be a goal, the wage and job goals may
181.22 	be set at zero. The goals for the number of jobs to be created
181.23 	or retained must result in job creation or retention by the
181.24 	recipient within the granting jurisdiction overall.
181.25 	In addition to other specific goal time frames, the wage
181.26 	and job goals must contain specific goals to be attained within
181.27 	two years of the benefit date.
181.28 	
EFFECTIVE DATE. This section is effective August 1, 2005,
181.29 	and applies to subsidy agreements entered into on or after that
181.30 	date.

181.31 	Sec. 3. Minnesota Statutes 2004, section 116J.994,
181.32 	subdivision 5, is amended to read:
181.33 		Subd. 5.Public notice and hearing.  (a) Before granting
181.34 	a business subsidy that exceeds $500,000 for a state government
181.35 	grantor and $100,000 for a local government grantor, the grantor
181.36 	must provide public notice and a hearing on the subsidy.  A
182.1 	public hearing and notice under this subdivision is not required
182.2 	if a hearing and notice on the subsidy is otherwise required by
182.3 	law.
182.4 	(b) Public notice of a proposed business subsidy under this
182.5 	subdivision by a state government grantor, other than the Iron
182.6 	Range Resources and Rehabilitation Board, must be published in
182.7 	the State Register.  Public notice of a proposed business
182.8 	subsidy under this subdivision by a local government grantor or
182.9 	the Iron Range Resources and Rehabilitation Board must be
182.10 	published in a local newspaper of general circulation.  The
182.11 	public notice must identify the location at which information
182.12 	about the business subsidy, including a summary of the terms of
182.13 	the subsidy, is available.  Published notice should be
182.14 	sufficiently conspicuous in size and placement to distinguish
182.15 	the notice from the surrounding text.  The grantor must make the
182.16 	information available in printed paper copies and, if possible,
182.17 	on the Internet.  The government agency must provide at least a
182.18 	ten-day notice for the public hearing.
182.19 	(c) The public notice must include the date, time, and
182.20 	place of the hearing.
182.21 	(d) The public hearing by a state government grantor other
182.22 	than the Iron Range Resources and Rehabilitation Board must be
182.23 	held in St. Paul.
182.24 	(e) If more than one nonstate grantor provides a business
182.25 	subsidy to the same recipient, the nonstate grantors may
182.26 	designate one nonstate grantor to hold a single public hearing
182.27 	regarding the business subsidies provided by all nonstate
182.28 	grantors.  For the purposes of this paragraph, "nonstate
182.29 	grantor" includes the iron range resources and rehabilitation
182.30 	board.
182.31 	(f) The public notice of any public meeting about a
182.32 	business subsidy agreement, including those required by this
182.33 	subdivision and by subdivision 4, must include notice that a
182.34 	person with residence in or the owner of taxable property in the
182.35 	granting jurisdiction may file a written complaint with the
182.36 	grantor if the grantor fails to comply with sections 116J.993 to
183.1 	116J.995, and that no action may be filed against the grantor
183.2 	for the failure to comply unless a written complaint is filed.
183.3 	
EFFECTIVE DATE. This section is effective August 1, 2005.

183.4 	Sec. 4. Minnesota Statutes 2004, section 116J.994,
183.5 	subdivision 9, is amended to read:
183.6 		Subd. 9.Compilation and summary report.  The Department
183.7 	of Employment and Economic Development must publish a
183.8 	compilation and summary of the results of the reports for the
183.9 	previous two calendar years by December 1 of 2004 and every
183.10 	other year thereafter.  The reports of the government agencies
183.11 	to the department and the compilation and summary report of the
183.12 	department must be made available to the public. The
183.13 	commissioner must make copies of all business subsidy reports
183.14 	submitted by local and state granting agencies available on the
183.15 	department's Web site by October 1 of the year in which they
183.16 	were submitted.
183.17 	The commissioner must coordinate the production of reports
183.18 	so that useful comparisons across time periods and across
183.19 	grantors can be made.  The commissioner may add other
183.20 	information to the report as the commissioner deems necessary to
183.21 	evaluate business subsidies.  Among the information in the
183.22 	summary and compilation report, the commissioner must include:
183.23 	(1) total amount of subsidies awarded in each development
183.24 	region of the state;
183.25 	(2) distribution of business subsidy amounts by size of the
183.26 	business subsidy;
183.27 	(3) distribution of business subsidy amounts by time
183.28 	category;
183.29 	(4) distribution of subsidies by type and by public
183.30 	purpose;
183.31 	(5) percent of all business subsidies that reached their
183.32 	goals;
183.33 	(6) percent of business subsidies that did not reach their
183.34 	goals by two years from the benefit date;
183.35 	(7) total dollar amount of business subsidies that did not
183.36 	meet their goals after two years from the benefit date;
184.1 	(8) percent of subsidies that did not meet their goals and
184.2 	that did not receive repayment;
184.3 	(9) list of recipients that have failed to meet the terms
184.4 	of a subsidy agreement in the past five years and have not
184.5 	satisfied their repayment obligations;
184.6 	(10) number of part-time and full-time jobs within separate
184.7 	bands of wages; and
184.8 	(11) benefits paid within separate bands of wages.
184.9 	
EFFECTIVE DATE. This section is effective August 1, 2005.

184.10 	Sec. 5. Minnesota Statutes 2004, section 116J.994, is
184.11 	amended by adding a subdivision to read:
184.12 		Subd. 11.Enforcement. (a) A person with residence in or
184.13 	an owner of taxable property located in the jurisdiction of the
184.14 	grantor may bring an action for equitable relief arising out of
184.15 	the failure of the grantor to comply with sections 116J.993 to
184.16 	116J.995.  The court may award a prevailing party in an action
184.17 	under this subdivision costs and reasonable attorney fees.
184.18 	(b) Prior to bringing an action, the party must file a
184.19 	written complaint with the grantor stating the alleged violation
184.20 	and proposing a remedy.  The grantor has up to 30 days to reply
184.21 	to the complaint in writing and may take action to comply with
184.22 	sections 116J.993 to 116J.995.
184.23 	(c) The written complaint under this subdivision for
184.24 	failure to comply with subdivisions 1 to 5, must be filed with
184.25 	the grantor within 180 days after approval of the subsidy
184.26 	agreement under subdivision 3, paragraph (d).  An action under
184.27 	this subdivision must be commenced within 30 days following
184.28 	receipt of the grantor's reply, or within 180 days after
184.29 	approval of the subsidy agreement under subdivision 3, paragraph
184.30 	(d), whichever is later.
184.31 	
EFFECTIVE DATE. This section is effective August 1, 2005,
184.32 	and applies to subsidy agreements entered into on or after that
184.33 	date.

184.34 	Sec. 6. Minnesota Statutes 2004, section 272.02,
184.35 	subdivision 64, as amended by Laws 2005, chapter 152, article 2,
184.36 	section 2, is amended to read:
185.1 		Subd. 64.Job opportunity building zone property. (a)
185.2 	Improvements to real property, and personal property, classified
185.3 	under section 273.13, subdivision 24, and located within a job
185.4 	opportunity building zone, designated under section 469.314, are
185.5 	exempt from ad valorem taxes levied under chapter 275.
185.6 	(b) Improvements to real property, and tangible personal
185.7 	property, of an agricultural production facility located within
185.8 	an agricultural processing facility zone, designated under
185.9 	section 469.314, is exempt from ad valorem taxes levied under
185.10 	chapter 275.
185.11 	(c) For property to qualify for exemption under paragraph
185.12 	(a), the occupant must be a qualified business, as defined in
185.13 	section 469.310.
185.14 	(d) The exemption applies beginning for the first
185.15 	assessment year after designation of the job opportunity
185.16 	building zone by the commissioner of employment and economic
185.17 	development.  The exemption applies to each assessment year that
185.18 	begins during the duration of the job opportunity building zone
185.19 	and to property .  To be exempt, the property must be occupied by
185.20 	July 1 of the assessment year by a qualified business that has
185.21 	signed the business subsidy agreement and relocation agreement,
185.22 	if required, by July 1 of the assessment year.  This exemption
185.23 	does not apply to:
185.24 	(1) the levy under section 475.61 or similar levy
185.25 	provisions under any other law to pay general obligation bonds;
185.26 	or
185.27 	(2) a levy under section 126C.17, if the levy was approved
185.28 	by the voters before the designation of the job opportunity
185.29 	building zone.
185.30 	(e) This subdivision does not apply to captured net tax
185.31 	capacity in a tax increment financing district to the extent
185.32 	necessary to meet the debt repayment obligations of the
185.33 	authority if the property is also located within an agricultural
185.34 	processing zone.
185.35 	
EFFECTIVE DATE. This section is effective for taxes
185.36 	payable in 2006 and thereafter, except that the stricken
186.1 	paragraph (e) is effective the day following final enactment.

186.2 	Sec. 7. Minnesota Statutes 2004, section 289A.56, is
186.3 	amended by adding a subdivision to read:
186.4 		Subd. 7.Biotechnology and health sciences industry zone
186.5 	refunds. Notwithstanding subdivision 3, for refunds payable
186.6 	under section 297A.68, subdivision 38, interest is computed from
186.7 	90 days after the refund claim is filed with the commissioner.
186.8 	
EFFECTIVE DATE. This section is effective for refund
186.9 	claims filed on or after August 1, 2005.

186.10 	Sec. 8. Minnesota Statutes 2004, section 297A.68,
186.11 	subdivision 37, is amended to read:
186.12 		Subd. 37.Job opportunity building zones.  (a) Purchases
186.13 	of tangible personal property or taxable services by a qualified
186.14 	business, as defined in section 469.310, are exempt if the
186.15 	property or services are primarily used or consumed in a job
186.16 	opportunity building zone designated under section 469.314. For
186.17 	purposes of this subdivision, an aerial camera package,
186.18 	including any camera, computer, and navigation device contained
186.19 	in the package, that is used in an aircraft that is operated
186.20 	under a Federal Aviation Administration Restricted Airworthiness
186.21 	Certificate according to Code of Federal Regulations, title 14,
186.22 	part 21, section 21.25(b)(3), relating to aerial surveying, and
186.23 	that is based, maintained, and dispatched from a job opportunity
186.24 	building zone, qualifies as primarily used or consumed in a job
186.25 	opportunity building zone if the imagery acquired from the
186.26 	aerial camera package is returned to the job opportunity
186.27 	building zone for processing.  The exemption for an aerial
186.28 	camera package is limited to $50,000 in taxes and the tax must
186.29 	be imposed and collected as if the rate under section 297A.62,
186.30 	subdivision 1, applied and then refunded in the manner provided
186.31 	in section 297A.75.
186.32 	(b) Purchase and use of construction materials and ,
186.33 	supplies for , or equipment used or consumed in the construction
186.34 	of improvements to real property in a job opportunity building
186.35 	zone are exempt if the improvements after completion of
186.36 	construction are to be used in the conduct of a qualified
187.1 	business, as defined in section 469.310.  This exemption applies
187.2 	regardless of whether the purchases are made by the business or
187.3 	a contractor.
187.4 	(c) The exemptions under this subdivision apply to a local
187.5 	sales and use tax regardless of whether the local sales tax is
187.6 	imposed on the sales taxable as defined under this chapter.
187.7 	(d) This subdivision applies to sales, if the purchase was
187.8 	made and delivery received during the duration of the zone.
187.9 	(e) Notwithstanding the restriction in paragraph (a), which
187.10 	requires items purchased to be primarily used or consumed in the
187.11 	zone, purchases by a qualified business that is an electrical
187.12 	cooperative located in Meeker County of equipment and materials
187.13 	used for the generation, transmission, and distribution of
187.14 	electrical energy are exempt under this subdivision, except that:
187.15 	(1) the exemption for materials and equipment used or
187.16 	consumed outside the zone must not exceed $200,000 in taxes; and 
187.17 	(2) no sales and use tax exemption is allowed for equipment
187.18 	purchased for resale.
187.19 	For purposes of this paragraph, the tax must be imposed and
187.20 	collected as if the rate under section 297A.62, subdivision 1,
187.21 	applied and then refunded in the manner provided in section
187.22 	297A.75.
187.23 	
EFFECTIVE DATE. This section is effective the day
187.24 	following final enactment.

187.25 	Sec. 9. Minnesota Statutes 2004, section 297A.68,
187.26 	subdivision 38, is amended to read:
187.27 		Subd. 38.Biotechnology and health sciences industry
187.28 	zone.  (a) Purchases of tangible personal property or taxable
187.29 	services by a qualified business, as defined in section 469.330,
187.30 	are exempt if the property or services are primarily used or
187.31 	consumed in a biotechnology and health sciences industry zone
187.32 	designated under section 469.334.
187.33 	(b) Purchase and use of construction materials and ,
187.34 	supplies for , or equipment used or consumed in the construction
187.35 	of improvements to real property in a biotechnology and health
187.36 	sciences industry zone are exempt if the improvements after
188.1 	completion of construction are to be used in the conduct of a
188.2 	qualified business, as defined in section 469.330.  This
188.3 	exemption applies regardless of whether the purchases are made
188.4 	by the business or a contractor.
188.5 	(c) The exemptions under this subdivision apply to a local
188.6 	sales and use tax regardless of whether the local sales tax is
188.7 	imposed on the sales taxable as defined under this chapter.
188.8 	(d)(1) The tax on sales of goods or services exempted under
188.9 	this subdivision are imposed and collected as if the applicable
188.10 	rate under section 297A.62 applied.  Upon application by the
188.11 	purchaser, on forms prescribed by the commissioner, a refund
188.12 	equal to the tax paid must be paid to the purchaser.  The
188.13 	application must include sufficient information to permit the
188.14 	commissioner to verify the sales tax paid and the eligibility of
188.15 	the claimant to receive the credit.  No more than two
188.16 	applications for refunds may be filed under this subdivision in
188.17 	a calendar year.  The provisions of section 289A.40 apply to the
188.18 	refunds payable under this subdivision.
188.19 	(2) The amount required to make the refunds is annually
188.20 	appropriated to the commissioner of revenue.
188.21 	(3) The aggregate amount refunded to a qualified business
188.22 	must not exceed the amount allocated to the qualified business
188.23 	under section 469.335.
188.24 	(e) This subdivision applies only to sales made during the
188.25 	duration of the designation of the zone.
188.26 	
EFFECTIVE DATE. This section is effective for sales made
188.27 	after December 31, 2003.

188.28 	Sec. 10. Minnesota Statutes 2004, section 469.1082, is
188.29 	amended by adding a subdivision to read:
188.30 		Subd. 8.Nine-member boards authorized. In addition to
188.31 	the board options under section 469.095, a county economic
188.32 	development authority may have a nine-member board.  If the
188.33 	authority has a nine-member board, at least two members must be
188.34 	county commissioners appointed by the county board.  Of the
188.35 	county economic development authority board members initially
188.36 	appointed, two each shall be appointed for terms of one, two, or
189.1 	three years, respectively, and one each for terms of four, five,
189.2 	or six years, respectively.  Thereafter, all authority members
189.3 	shall be appointed for six-year terms.

189.4 	Sec. 11. Minnesota Statutes 2004, section 469.169, is
189.5 	amended by adding a subdivision to read:
189.6 		Subd. 17.Additional border city allocations. (a) In
189.7 	addition to tax reductions authorized in subdivisions 7 to 16,
189.8 	the commissioner shall allocate $750,000 for tax reductions to
189.9 	border city enterprise zones in cities located on the western
189.10 	border of the state.  The commissioner shall make allocations to
189.11 	zones in cities on the western border on a per capita basis.
189.12 	Allocations made under this subdivision may be used for tax
189.13 	reductions as provided in section 469.171, or for other offsets
189.14 	of taxes imposed on or remitted by businesses located in the
189.15 	enterprise zone, but only if the municipality determines that
189.16 	the granting of the tax reduction or offset is necessary in
189.17 	order to retain a business within or attract a business to the
189.18 	zone.  Any portion of the allocation provided in this paragraph
189.19 	may alternatively be used for tax reductions under section
189.20 	469.1732 or 469.1734.
189.21 	(b) The commissioner shall allocate $750,000 for tax
189.22 	reductions under section 469.1732 or 469.1734 to cities with
189.23 	border city enterprise zones located on the western border of
189.24 	the state.  The commissioner shall allocate this amount among
189.25 	the cities on a per capita basis.  Any portion of the allocation
189.26 	provided in this paragraph may alternatively be used for tax
189.27 	reductions as provided in section 469.171.
189.28 	
EFFECTIVE DATE. This section is effective the day
189.29 	following final enactment.

189.30 	Sec. 12. Minnesota Statutes 2004, section 469.310,
189.31 	subdivision 11, as amended by Laws 2005, First Special Session
189.32 	chapter 1, article 4, section 107, is amended to read:
189.33 		Subd. 11.Qualified business. (a) A person carrying on a
189.34 	trade or business at a place of business located within a job
189.35 	opportunity building zone is a qualified business for the
189.36 	purposes of sections 469.310 to 469.320 according to the
190.1 	criteria in paragraphs (b) to (f).
190.2 	(b) A person is a qualified business only on those parcels
190.3 	of land for which the person has entered into a business subsidy
190.4 	agreement, as required under section 469.313, with the
190.5 	appropriate local government unit in which the parcels are
190.6 	located.
190.7 	(c) Prior to execution of the business subsidy agreement,
190.8 	the local government unit must consider the following factors:
190.9 	(1) how wages compare to the regional industry average;
190.10 	(2) the number of jobs that will be provided relative to
190.11 	overall employment in the community;
190.12 	(3) the economic outlook for the industry the business will
190.13 	engage in;
190.14 	(4) sales that will be generated from outside the state of
190.15 	Minnesota;
190.16 	(5) how the business will build on existing regional
190.17 	strengths or diversify the regional economy;
190.18 	(6) how the business will increase capital investment in
190.19 	the zone; and
190.20 	(7) any other criteria the commissioner deems necessary.
190.21 	(d) A person that relocates a trade or business from
190.22 	outside a job opportunity building zone into a zone is not a
190.23 	qualified business unless the business meets all of the
190.24 	requirements of paragraphs (b) and (c) and:
190.25 	(1) increases full-time employment in the first full year
190.26 	of operation within the job opportunity building zone by a
190.27 	minimum of five jobs or 20 percent, whichever is greater,
190.28 	measured relative to the operations that were relocated and
190.29 	maintains the required level of employment for each year the
190.30 	zone designation applies; and
190.31 	(2) enters a binding written agreement with the
190.32 	commissioner that:
190.33 	(i) pledges the business will meet the requirements of
190.34 	clause (1);
190.35 	(ii) provides for repayment of all tax benefits enumerated
190.36 	under section 469.315 to the business under the procedures in
191.1 	section 469.319, if the requirements of clause (1) are not met
191.2 	for the taxable year or for taxes payable during the year in
191.3 	which the requirements were not met; and
191.4 	(iii) contains any other terms the commissioner determines
191.5 	appropriate.
191.6 	(e) The commissioner may waive the requirements under
191.7 	paragraph (d), clause (1), if the commissioner determines that
191.8 	the qualified business will substantially achieve the factors
191.9 	under this subdivision.
191.10 	(f) A business is not a qualified business if, at its
191.11 	location or locations in the zone, the business is primarily
191.12 	engaged in making retail sales to purchasers who are physically
191.13 	present at the business's zone location.
191.14 	(g) A qualifying business must pay each employee
191.15 	compensation, including benefits not mandated by law, that on an
191.16 	annualized basis is equal to at least 110 percent of the federal
191.17 	poverty level for a family of four.
191.18 	(h) A public utility, as defined in section 300.111, is not
191.19 	a qualified business.
191.20 	
EFFECTIVE DATE. This section is effective the day
191.21 	following final enactment and applies to any business entering a
191.22 	business subsidy agreement for a job opportunity development
191.23 	zone after that date.

191.24 	Sec. 13. Minnesota Statutes 2004, section 469.310, is
191.25 	amended by adding a subdivision to read:
191.26 		Subd. 13.Relocation payroll percentage. "Relocation
191.27 	payroll percentage" is a fraction, the numerator of which is the
191.28 	zone payroll of the business for the tax year minus the payroll
191.29 	from the relocated operations in the last full year of
191.30 	operations prior to the relocation, and the denominator of which
191.31 	is the zone payroll of the business for the tax year.  The
191.32 	relocation payroll percentage of a business that is not a
191.33 	relocating business is 100 percent.
191.34 	
EFFECTIVE DATE. This section is effective the day
191.35 	following final enactment but applies only to qualified
191.36 	businesses with business subsidy agreements that are fully
192.1 	executed after August 31, 2005.

192.2 	Sec. 14. Minnesota Statutes 2004, section 469.316, is
192.3 	amended to read:
192.4 	469.316 INDIVIDUAL INCOME TAX EXEMPTION.
192.5 		Subdivision 1.Application. An individual, estate, or
192.6 	trust operating a trade or business in a job opportunity
192.7 	building zone, and an individual, estate, or trust making a
192.8 	qualifying investment in a qualified business operating in a job
192.9 	opportunity building zone qualifies for the exemptions from
192.10 	taxes imposed under chapter 290, as provided in this section.
192.11 	The exemptions provided under this section apply only to the
192.12 	extent that the income otherwise would be taxable under chapter
192.13 	290.  Subtractions under this section from federal taxable
192.14 	income, alternative minimum taxable income, or any other base
192.15 	subject to tax are limited to the amount that otherwise would be
192.16 	included in the tax base absent the exemption under this
192.17 	section.  This section applies only to taxable years beginning
192.18 	during the duration of the job opportunity building zone.
192.19 		Subd. 2.Rents. An individual, estate, or trust is
192.20 	exempt from the taxes imposed under chapter 290 on net rents
192.21 	derived from real or tangible personal property used by a
192.22 	qualified business and located in a zone for a taxable year in
192.23 	which the zone was designated a job opportunity building zone.
192.24 	If tangible personal property was used both within and outside
192.25 	of the zone by the qualified business, the exemption amount for
192.26 	the net rental income must be multiplied by a fraction, the
192.27 	numerator of which is the number of days the property was used
192.28 	in the zone and the denominator of which is the total days the
192.29 	property is rented by the qualified business.
192.30 		Subd. 3.Business income. An individual, estate, or
192.31 	trust is exempt from the taxes imposed under chapter 290 on net
192.32 	income from the operation of a qualified business in a job
192.33 	opportunity building zone.  If the trade or business is carried
192.34 	on within and without the zone and the individual is not a
192.35 	resident of Minnesota, or the taxpayer is an estate or trust,
192.36 	the exemption must be apportioned based on the zone percentage
193.1 	and the relocation payroll percentage for the taxable year.  If
193.2 	the trade or business is carried on within and without the zone
193.3 	and the individual is a resident of Minnesota, the exemption
193.4 	must be apportioned based on the zone percentage and the
193.5 	relocation payroll percentage for the taxable year, except the
193.6 	ratios under section 469.310, subdivision 7, clause (1), items
193.7 	(i) and (ii), must use the denominators of the property and
193.8 	payroll factors determined under section 290.191.  No
193.9 	subtraction is allowed under this section in excess of 20
193.10 	percent of the sum of the job opportunity building zone payroll
193.11 	and the adjusted basis of the property at the time that the
193.12 	property is first used in the job opportunity building zone by
193.13 	the business.
193.14 		Subd. 4.Capital gains. (a) An individual, estate, or
193.15 	trust is exempt from the taxes imposed under chapter 290 on:
193.16 	(1) net gain derived on a sale or exchange of real property
193.17 	located in the zone and used by a qualified business.  If the
193.18 	property was held by the individual, estate, or trust during a
193.19 	period when the zone was not designated, the gain must be
193.20 	prorated based on the percentage of time, measured in calendar
193.21 	days, that the real property was held by the individual, estate,
193.22 	or trust during the period the zone designation was in effect to
193.23 	the total period of time the real property was held by the
193.24 	individual;
193.25 	(2) net gain derived on a sale or exchange of tangible
193.26 	personal property used by a qualified business in the zone.  If
193.27 	the property was held by the individual, estate, or trust during
193.28 	a period when the zone was not designated, the gain must be
193.29 	prorated based on the percentage of time, measured in calendar
193.30 	days, that the property was held by the individual, estate, or
193.31 	trust during the period the zone designation was in effect to
193.32 	the total period of time the property was held by the
193.33 	individual.  If the tangible personal property was used outside
193.34 	of the zone during the period of the zone's designation, the
193.35 	exemption must be multiplied by a fraction, the numerator of
193.36 	which is the number of days the property was used in the zone
194.1 	during the time of the designation and the denominator of which
194.2 	is the total days the property was held during the time of the
194.3 	designation; and
194.4 	(3) net gain derived on a sale of an ownership interest in
194.5 	a qualified business operating in the job opportunity building
194.6 	zone, meeting the requirements of paragraph (b).  The exemption
194.7 	on the gain must be multiplied by the zone percentage of the
194.8 	business for the taxable year prior to the sale.
194.9 	(b) A qualified business meets the requirements of
194.10 	paragraph (a), clause (3), if it is a corporation, an S
194.11 	corporation, or a partnership, and for the taxable year its job
194.12 	opportunity building zone percentage exceeds 25 percent.  For
194.13 	purposes of paragraph (a), clause (3), the zone percentage must
194.14 	be calculated by modifying the ratios under section 469.310,
194.15 	subdivision 7, clause (1), items (i) and (ii), to use the
194.16 	denominators of the property and payroll factors determined
194.17 	under section 290.191.  Upon the request of an individual,
194.18 	estate, or trust holding an ownership interest in the entity,
194.19 	the entity must certify to the owner, in writing, the job
194.20 	opportunity building zone percentage needed to determine the
194.21 	exemption.
194.22 	
EFFECTIVE DATE. This section is effective for tax years
194.23 	beginning after December 31, 2003, except that changes in
194.24 	subdivision 3 relating to the relocation payroll percentage are
194.25 	effective the day following final enactment and apply only to
194.26 	qualified businesses with business subsidy agreements that are
194.27 	fully executed after August 31, 2005.

194.28 	Sec. 15. Minnesota Statutes 2004, section 469.317, is
194.29 	amended to read:
194.30 	469.317 CORPORATE FRANCHISE TAX EXEMPTION.
194.31 	(a) A qualified business is exempt from taxation under
194.32 	section 290.02, the alternative minimum tax under section
194.33 	290.0921, and the minimum fee under section 290.0922, on the
194.34 	portion of its income attributable to operations within the
194.35 	zone.  This exemption is determined as follows:
194.36 	(1) for purposes of the tax imposed under section 290.02,
195.1 	by multiplying its taxable net income by its zone percentage and
195.2 	by its relocation payroll percentage and subtracting the result
195.3 	in determining taxable income;
195.4 	(2) for purposes of the alternative minimum tax under
195.5 	section 290.0921, by multiplying its alternative minimum taxable
195.6 	income by its zone percentage and by its relocation payroll
195.7 	percentage and reducing alternative minimum taxable income by
195.8 	this amount; and
195.9 	(3) for purposes of the minimum fee under section 290.0922,
195.10 	by excluding property and payroll in the zone from the
195.11 	computations of the fee or by exempting the entity under section
195.12 	290.0922, subdivision 2, clause (7).
195.13 	(b) No subtraction is allowed under this section in excess
195.14 	of 20 percent of the sum of the corporation's job opportunity
195.15 	building zone payroll and the adjusted basis of the property at
195.16 	the time that the property is first used in the job opportunity
195.17 	building zone by the corporation.
195.18 	(c) This section applies only to taxable years beginning
195.19 	during the duration of the job opportunity building zone.

195.20 	EFFECTIVE DATE. This section is effective the day
195.21 	following final enactment but applies only to qualified
195.22 	businesses with business subsidy agreements that are fully
195.23 	executed after August 31, 2005.

195.24 	Sec. 16. Minnesota Statutes 2004, section 469.337, is
195.25 	amended to read:
195.26 	469.337 CORPORATE FRANCHISE TAX EXEMPTION.
195.27 	(a) A qualified business is exempt from taxation under
195.28 	section 290.02, the alternative minimum tax under section
195.29 	290.0921, and the minimum fee under section 290.0922, on the
195.30 	portion of its income attributable to operations of a qualified
195.31 	business within the biotechnology and health sciences industry
195.32 	zone.  This exemption is determined as follows:
195.33 	(1) for purposes of the tax imposed under section 290.02,
195.34 	by multiplying its taxable net income by its zone percentage and
195.35 	subtracting the result in determining taxable income;
195.36 	(2) for purposes of the alternative minimum tax under
196.1 	section 290.0921, by multiplying its alternative minimum taxable
196.2 	income by its zone percentage and reducing alternative minimum
196.3 	taxable income by this amount; and
196.4 	(3) for purposes of the minimum fee under section 290.0922,
196.5 	by excluding zone property and payroll in the zone from the
196.6 	computations of the fee. The qualified business is exempt from
196.7 	the minimum fee if all of its property is located in the zone
196.8 	and all of its payroll is zone payroll.
196.9 	(b) No subtraction is allowed under this section in excess
196.10 	of 20 percent of the sum of the corporation's biotechnology and
196.11 	health sciences industry zone payroll and the adjusted basis of
196.12 	the property at the time that the property is first used in the
196.13 	biotechnology and health sciences industry zone by the
196.14 	corporation.
196.15 	(c) No reduction in tax is allowed in excess of the amount
196.16 	allocated under section 469.335.

196.17 	EFFECTIVE DATE. This section is effective for tax years
196.18 	beginning after December 31, 2003.

196.19 	Sec. 17. CITY OF RAMSEY; HOUSING TAX INCREMENT DISTRICT.
 196.20 		Subdivision 1.Authorization. The governing body of the
196.21 	city of Ramsey may create a housing tax increment financing
196.22 	district as provided in this section.  The city or its economic
196.23 	development authority may be the "authority" for the purposes of
196.24 	Minnesota Statutes, sections 469.174 to 469.179.
196.25 		Subd. 2.Development parcel. (a) For the purposes of
196.26 	this section, "development parcel" means the property in the
196.27 	city of Ramsey generally described as the easterly 4.1 acres of
196.28 	Outlot AA, Ramsey Town Center Addition.
196.29 		Subd. 3.Special rules. (a) The district established
196.30 	under this section is subject to the provisions of Minnesota
196.31 	Statutes, sections 469.174 to 469.179, except as provided in
196.32 	this subdivision.
196.33 	(b) The district may consist of all or a portion of the
196.34 	development parcel.
196.35 	(c) The housing district shall be as described in Minnesota
196.36 	Statutes, section 469.174, subdivision 11.  All improvements
197.1 	constructed within the district shall be considered to be made
197.2 	for the benefit of low and moderate income persons, if at least
197.3 	20 percent of the housing units in the district are reserved for
197.4 	persons with incomes of 50 percent or less of the metropolitan
197.5 	area median income and that home care and supportive services
197.6 	are available to residents of all housing units in the district.
197.7 	(d) Minnesota Statutes, section 469.176, subdivision 7,
197.8 	does not apply to the housing district authorized in this
197.9 	section.
197.10 	
EFFECTIVE DATE. This section is effective the day
197.11 	following final enactment, upon compliance with Minnesota
197.12 	Statutes, section 645.021.

197.13 	Sec. 18. RURAL FINANCE AUTHORITY.
 197.14 		Subdivision 1.Appropriation. $18,000,000 is
197.15 	appropriated from the bond proceeds fund for the purposes set
197.16 	forth in the Minnesota Constitution, article XI, section 5,
197.17 	clause (h), to the Rural Finance Authority to purchase
197.18 	participation interests in or to make direct agricultural loans
197.19 	to farmers under Minnesota Statutes, chapter 41B.  This
197.20 	appropriation is for the beginning farmer program under
197.21 	Minnesota Statutes, section 41B.039; the loan restructuring
197.22 	program under Minnesota Statutes, section 41B.04; the
197.23 	seller-sponsored program under Minnesota Statutes, section
197.24 	41B.042; the agricultural improvement loan program under
197.25 	Minnesota Statutes, section 41B.043; and the livestock expansion
197.26 	loan program under Minnesota Statutes, section 41B.045.  All
197.27 	debt service on bond proceeds used to finance this appropriation
197.28 	must be repaid by the Rural Finance Authority under Minnesota
197.29 	Statutes, section 16A.643.  Loan participations must be priced
197.30 	to provide full interest and principal coverage and a reserve
197.31 	for potential losses.  Priority for loans must be given first to
197.32 	basic beginning farmer loans; second, to seller-sponsored loans;
197.33 	and third, to agricultural improvement loans.
197.34 		Subd. 2.Bond sale. To provide the money appropriated in
197.35 	this section from the bond proceeds fund, the commissioner of
197.36 	finance shall sell and issue bonds of the state in an amount up
198.1 	to $18,000,000 in the manner, upon the terms, and with the
198.2 	effect prescribed by Minnesota Statutes, sections 16A.631 to
198.3 	16A.675, and by the Minnesota Constitution, article XI, sections
198.4 	4 to 7.
198.5 	
EFFECTIVE DATE. This section is effective the day
198.6 	following final enactment.

198.7 	Sec. 19. JOBZ EXPENDITURE LIMITATIONS; AUDITS.
 198.8 		Subdivision 1.Determination of tax expenditures. By
198.9 	September 1, 2005, the commissioner of revenue, with the
198.10 	assistance of the commissioner of employment and economic
198.11 	development, must estimate the total amount of tax expenditures
198.12 	projected to have been obligated for all job opportunity
198.13 	building zone projects that have been approved before June 1,
198.14 	2005.  If the commissioner of revenue determines that the
198.15 	estimated amount of tax expenditures for fiscal years 2005-2007
198.16 	exceeds $13,780,000, the commissioner of revenue must inform the
198.17 	chairs of the house of representatives and senate tax committees.
198.18 		Subd. 2.Audits. The Tax Increment Financing, Investment
198.19 	and Finance Division of the Office of the State Auditor must
198.20 	annually audit the creation and operation of all job opportunity
198.21 	building zones and business subsidy agreements entered into
198.22 	under Minnesota Statutes, sections 469.310 to 469.320.

198.23 	Sec. 20. REPEALER.
 198.24 	Minnesota Statutes 2004, section 272.02, subdivision 65, is
198.25 	repealed effective for taxes payable in 2006 and thereafter.
198.26 	Minnesota Statutes 2004, section 477A.08, is repealed effective
198.27 	for aid payable in 2005 and thereafter.

198.28 	ARTICLE 8
198.29 	TAX SHELTERS

198.30 	Section 1. [270C.60] EQUITABLE ACTIONS.
198.31 	(a) The commissioner may bring a civil action to enjoin any
198.32 	person from taking action or failing to take action that is
198.33 	subject to penalty under section 289A.60, subdivisions 20, 20a,
198.34 	and 26.
198.35 	(b) In any action under paragraph (a), the court may enjoin
198.36 	the person from engaging in the conduct, if the court finds that:
199.1 	(1) the person has engaged in the specified conduct; and 
199.2 	(2) injunctive relief is appropriate to prevent recurrence
199.3 	of the conduct.

199.4 	EFFECTIVE DATE. This section is effective the day
199.5 	following final enactment.

199.6 	Sec. 2. [289A.121] TAX SHELTERS; SPECIAL RULES.
199.7 		Subdivision 1.Scope. The provisions of this section
199.8 	apply to a tax shelter that:
199.9 	(1) is organized in this state;
199.10 	(2) is doing business in this state;
199.11 	(3) is deriving income from sources in this state; or 
199.12 	(4) has one or more investors that are Minnesota taxpayers
199.13 	under chapter 290.
199.14 		Subd. 2.Definitions. (a) For purposes of this section,
199.15 	the definitions under sections 6111, 6112, and 6707A of the
199.16 	Internal Revenue Code, including the regulations under those
199.17 	sections, apply.
199.18 	(b) The term "tax shelter" means any reportable transaction
199.19 	as defined under section 6707A(c)(1) of the Internal Revenue
199.20 	Code.
199.21 		Subd. 3.Registration. (a) Any material advisor required
199.22 	to register a tax shelter under section 6111 of the Internal
199.23 	Revenue Code must register the shelter with the commissioner.
199.24 	(b) A material advisor subject to this subdivision must
199.25 	send a duplicate of the federal registration information, along
199.26 	with any other information the commissioner requires, to the
199.27 	commissioner not later than the day on which interests in that
199.28 	tax shelter are first offered for sale to Minnesota taxpayers.
199.29 	(c) In addition to the requirements under paragraph (b),
199.30 	any listed transaction must be registered with the commissioner
199.31 	by the latest of:
199.32 	(1) 60 days after entering into the transaction;
199.33 	(2) 60 days after the transaction becomes a listed
199.34 	transaction; or 
199.35 	(3) October 15, 2005.
199.36 		Subd. 4.Registration number. (a) Any person required to
200.1 	register under section 6111 of the Internal Revenue Code who
200.2 	receives a tax registration number from the Secretary of the
200.3 	Treasury must file, within 30 days after requested by the
200.4 	commissioner, a statement of the registration number with the
200.5 	commissioner.
200.6 	(b) Any person who sells or otherwise transfers an interest
200.7 	in a tax shelter must, in the same time and manner required
200.8 	under section 6111(b) of the Internal Revenue Code, furnish to
200.9 	each investor who purchases or otherwise acquires an interest in
200.10 	the tax shelter the identification number assigned under federal
200.11 	law to the tax shelter.
200.12 	(c) Any person claiming any deduction, credit, or other tax
200.13 	benefit by reason of a tax shelter must include on the return on
200.14 	which the deduction, credit, or other benefit is claimed the
200.15 	identification number assigned under federal law to the tax
200.16 	shelter.
200.17 		Subd. 5.Reportable transactions. (a) For each taxable
200.18 	year in which a taxpayer must make a return or a statement under
200.19 	Code of Federal Regulations, title 26, section 1.6011-4, for a
200.20 	reportable transaction, including a listed transaction, in which
200.21 	the taxpayer participated in a taxable year for which a return
200.22 	is required under chapter 290, the taxpayer must file a copy of
200.23 	the disclosure with the commissioner.
200.24 	(b) Any taxpayer that is a member of a unitary business
200.25 	group that includes any person that must make a disclosure
200.26 	statement under Code of Federal Regulations, title 26, section
200.27 	1.6011-4, must file a disclosure under this subdivision.
200.28 	(c) Disclosure under this subdivision is required for any
200.29 	transaction entered into after December 31, 2001, that the
200.30 	Internal Revenue Service determines is a listed transaction at
200.31 	any time, and must be made in the manner prescribed by the
200.32 	commissioner.  For transactions in which the taxpayer
200.33 	participated for taxable years ending before December 31, 2005,
200.34 	disclosure must be made by the due date of the first return
200.35 	required under chapter 290 that occurs 60 days or more after the
200.36 	enactment of this section.  With respect to transactions in
201.1 	which the taxpayer participated for taxable years ending on and
201.2 	after December 31, 2005, disclosure must be made in the time and
201.3 	manner prescribed in Code of Federal Regulations, title 26,
201.4 	section 1.6011-4(e).
201.5 	(d) Notwithstanding paragraphs (a) to (c), no disclosure is
201.6 	required for transactions entered into after December 31, 2001,
201.7 	and before January 1, 2006, if (1) the taxpayer has filed an
201.8 	amended income tax return which reverses the tax benefits of the
201.9 	tax shelter transaction, or (2) as a result of a federal audit
201.10 	the Internal Revenue Service has determined the tax treatment of
201.11 	the transaction and an amended return has been filed to reflect
201.12 	the federal treatment.
201.13 		Subd. 6.Lists of investors. (a) Any person required to
201.14 	maintain a list under section 6112 of the Internal Revenue Code
201.15 	with respect to any reportable transaction must furnish the list
201.16 	to the commissioner no later than when required under federal
201.17 	law.  The list required under this subdivision must include the
201.18 	same information required with respect to a reportable
201.19 	transaction under section 6112 of the Internal Revenue Code, and
201.20 	any other information the commissioner requires.
201.21 	(b) For transactions entered into on or after December 31,
201.22 	2001, that become listed transactions at any time, the list must
201.23 	be furnished to the commissioner by the latest of:
201.24 	(1) 60 days after entering into the transaction;
201.25 	(2) 60 days after the transaction becomes a listed
201.26 	transaction; or 
201.27 	(3) October 15, 2005.
201.28 	
EFFECTIVE DATE. This section is effective the day
201.29 	following final enactment.

201.30 	Sec. 3. Minnesota Statutes 2004, section 289A.38, is
201.31 	amended by adding a subdivision to read:
201.32 		Subd. 16.Reportable transactions. (a) If a taxpayer
201.33 	fails to include on any return or statement for any taxable year
201.34 	any information with respect to a reportable transaction, as
201.35 	required by federal law and under section 289A.121, the
201.36 	commissioner may recompute the tax, including a refund, within
202.1 	the later of:
202.2 	(1) six years after the return is filed with respect to the
202.3 	taxable year in which the taxpayer participated in the
202.4 	reportable transaction; or 
202.5 	(2) for a listed transaction, as defined in section
202.6 	289A.121, for which the taxpayer fails to include on any return
202.7 	or statement for any taxable year any information that is
202.8 	required under section 289A.121, one year after the earlier of:
202.9 	(i) the date the taxpayer furnishes the required
202.10 	information to the commissioner; or 
202.11 	(ii) the date that a material advisor, as defined in
202.12 	section 289A.121, meets the requirements of section 289A.121,
202.13 	relating to the transaction with respect to the taxpayer.
202.14 	(b) If tax is assessable solely because of this section,
202.15 	the assessable deficiency is limited to the items that were not
202.16 	disclosed as required under section 289A.121.
202.17 	
EFFECTIVE DATE. This section is effective the day
202.18 	following final enactment.

202.19 	Sec. 4. Minnesota Statutes 2004, section 289A.60,
202.20 	subdivision 4, is amended to read:
202.21 		Subd. 4.Substantial understatement of liability;
202.22 	penalty. (a) The commissioner of revenue shall impose a penalty
202.23 	for substantial understatement of any tax payable to the
202.24 	commissioner, except a tax imposed under chapter 297A.
202.25 	(b) There must be added to the tax an amount equal to 20
202.26 	percent of the amount of any underpayment attributable to the
202.27 	understatement.  There is a substantial understatement of tax
202.28 	for the period if the amount of the understatement for the
202.29 	period exceeds the greater of:
202.30 	(1) ten percent of the tax required to be shown on the
202.31 	return for the period; or
202.32 	(2) (a) (i) $10,000 in the case of a mining company or a
202.33 	corporation, other than an S corporation as defined in section
202.34 	290.9725, when the tax is imposed by chapter 290 or section
202.35 	298.01 or 298.015, or
202.36 	(b) (ii) $5,000 in the case of any other taxpayer, and in
203.1 	the case of a mining company or a corporation any tax not
203.2 	imposed by chapter 290 or section 298.01 or 298.015.
203.3 	(c) For a corporation, other than an S corporation, there
203.4 	is also a substantial understatement of tax for any taxable year
203.5 	if the amount of the understatement for the taxable year exceeds
203.6 	the lesser of:
203.7 	(1) ten percent of the tax required to be shown on the
203.8 	return for the taxable year (or, if greater, $10,000); or 
203.9 	(2) $10,000,000.
203.10 	(d) The term "understatement" means the excess of the
203.11 	amount of the tax required to be shown on the return for the
203.12 	period, over the amount of the tax imposed that is shown on the
203.13 	return. The excess must be determined without regard to items
203.14 	to which subdivision 27 applies.The amount of the
203.15 	understatement shall be reduced by that part of the
203.16 	understatement that is attributable to the tax treatment of any
203.17 	item by the taxpayer if (1) there is or was substantial
203.18 	authority for the treatment, or (2)(i) any item with respect to
203.19 	which the relevant facts affecting the item's tax treatment are
203.20 	adequately disclosed in the return or in a statement attached to
203.21 	the return and (ii) there is a reasonable basis for the tax
203.22 	treatment of the item.  The exception for substantial authority
203.23 	under clause (1) does not apply to positions listed by the
203.24 	Secretary of the Treasury under section 6662(d)(3) of the
203.25 	Internal Revenue Code.  A corporation does not have a reasonable
203.26 	basis for its tax treatment of an item attributable to a
203.27 	multiple-party financing transaction if the treatment does not
203.28 	clearly reflect the income of the corporation within the meaning
203.29 	of section 6662(d)(2)(B) of the Internal Revenue Code.  The
203.30 	special rules in cases involving tax shelters provided in
203.31 	section 6662(d)(2)(C) of the Internal Revenue Code shall apply
203.32 	and shall apply to a tax shelter the principal purpose of which
203.33 	is the avoidance or evasion of state taxes.
203.34 	(e) The commissioner may abate all or any part of the
203.35 	addition to the tax provided by this section on a showing by the
203.36 	taxpayer that there was reasonable cause for the understatement,
204.1 	or part of it, and that the taxpayer acted in good faith.  The
204.2 	additional tax and penalty shall bear interest at the rate
204.3 	specified in section 270.75 from the time the tax should have
204.4 	been paid until paid.
204.5 	
EFFECTIVE DATE. This section is effective for taxable
204.6 	years beginning after December 31, 2004.

204.7 	Sec. 5. Minnesota Statutes 2004, section 289A.60,
204.8 	subdivision 20, is amended to read:
204.9 		Subd. 20.Penalty for promoting abusive tax shelters.
 204.10 	(a) Any person who:
204.11 	(1)(i) organizes or assists in the organization of a
204.12 	partnership or other entity, an investment plan or arrangement,
204.13 	or any other plan or arrangement, or (ii) participates in the
204.14 	sale of any interest in an entity or plan or arrangement
204.15 	referred to in clause (i); and
204.16 	(2) makes or furnishes in connection with the organization
204.17 	or sale a statement with respect to the allowability of a
204.18 	deduction or credit, the excludability of income, or the
204.19 	securing of any other tax benefit by reason of holding an
204.20 	interest in the entity or participating in the plan or
204.21 	arrangement that the person knows or has reason to know is false
204.22 	or fraudulent concerning any material matter, shall pay a
204.23 	penalty equal to the greater of $1,000 or 20 percent of the
204.24 	gross income derived or to be derived by the person from the
204.25 	activity.
204.26 	The penalty imposed by this subdivision is in addition to
204.27 	any other penalty provided by this section.  The penalty must be
204.28 	collected in the same manner as any delinquent income tax.  In a
204.29 	proceeding involving the issue of whether or not any person is
204.30 	liable for this penalty, the burden of proof is upon the
204.31 	commissioner.
204.32 	(b) If an activity for which a penalty imposed under this
204.33 	subdivision involves a statement that a material advisor, as
204.34 	defined in section 289A.121, has reason to know is false or
204.35 	fraudulent as to any material matter, the amount of the penalty
204.36 	equals the greater of:
205.1 	(1) the amount determined under paragraph (a); or 
205.2 	(2) 50 percent of the gross income derived or to be derived
205.3 	from the activity.
205.4 	
EFFECTIVE DATE. This section is effective for
205.5 	transactions entered into after the day following final
205.6 	enactment.

205.7 	Sec. 6. Minnesota Statutes 2004, section 289A.60, is
205.8 	amended by adding a subdivision to read:
205.9 		Subd. 20a.Aiding and abetting understating of tax
205.10 	liability. (a) A penalty in the amount specified under
205.11 	paragraph (b) for each document is imposed on each person who:
205.12 	(1) aids or assists in, procures, or advises with respect
205.13 	to, the preparation or presentation of any portion of a return,
205.14 	affidavit, claim, or other document;
205.15 	(2) knows or has reason to believe that the portion of a
205.16 	return, affidavit, claim, or other document will be used in
205.17 	connection with any material matter arising under the Minnesota
205.18 	individual income or corporate franchise tax; and 
205.19 	(3) knows that the portion, if so used, would result in an
205.20 	understatement of the liability for tax of another person.
205.21 	(b)(1) Except as provided in clause (2), the amount of the
205.22 	penalty imposed by this subdivision is $1,000.
205.23 	(2) If the return, affidavit, claim, or other document
205.24 	relates to the tax liability of a corporation, the amount of the
205.25 	penalty imposed by paragraph (a) is $10,000.
205.26 	(3) If any person is subject to a penalty under paragraph
205.27 	(a) for any document relating to any taxpayer for any taxable
205.28 	period or taxable event, the person is not subject to a penalty
205.29 	under paragraph (a) for any other document relating to the
205.30 	taxpayer for the taxable period or event.
205.31 	(c) For purposes of this subdivision, "procures" includes
205.32 	(1) ordering or otherwise causing any other person to do an act,
205.33 	and (2) knowing of, and not attempting to prevent, participation
205.34 	by any other person in an act.
205.35 	(d) In a proceeding involving the issue of whether or not
205.36 	any person is liable for this penalty, the burden of proof is
206.1 	upon the commissioner.  The penalty applies whether or not the
206.2 	understatement is with the knowledge or consent of the persons
206.3 	authorized or required to present the return, affidavit, claim,
206.4 	or other document.
206.5 	(e) For purposes of paragraph (a), clause (1), a person
206.6 	furnishing typing, reproducing, or other mechanical assistance
206.7 	with respect to a document is not treated as having aided or
206.8 	assisted in the preparation of the document by reason of the
206.9 	assistance.
206.10 	(f)(1) Except as provided by clause (2), the penalty
206.11 	imposed by this section is in addition to any other penalty
206.12 	provided by law.
206.13 	(2) No penalty applies under subdivision 20 to any person
206.14 	for any document for which a penalty is assessed on the person
206.15 	under this subdivision.
206.16 	
EFFECTIVE DATE. This section is effective for documents
206.17 	prepared after the day following final enactment that relate to
206.18 	taxable years beginning after December 31, 2004, or to returns
206.19 	filed after the day following final enactment.

206.20 	Sec. 7. Minnesota Statutes 2004, section 289A.60, is
206.21 	amended by adding a subdivision to read:
206.22 		Subd. 26.Tax shelter penalties; registration and
206.23 	listing. (a) For purposes of this subdivision, "material
206.24 	advisor" has the meaning given it under section 6111(b)(1) of
206.25 	the Internal Revenue Code.
206.26 	(b) The penalties in this subdivision apply in connection
206.27 	with the use of tax shelters, as defined under section 289A.121,
206.28 	and the definitions under that section apply for the purposes of
206.29 	this subdivision.
206.30 	(c) A material advisor who fails to register a tax shelter,
206.31 	including providing all of the required information under
206.32 	section 289A.121, on or before the date prescribed or who files
206.33 	false or incomplete information with respect to the transaction
206.34 	is subject to a penalty of $50,000.  If the tax shelter is a
206.35 	listed transaction, a penalty applies equal to the greater of:
206.36 	(1) $200,000;
207.1 	(2) 50 percent of the gross income that the material
207.2 	advisor derived from that activity; or 
207.3 	(3) 75 percent of the gross income that the material
207.4 	advisor derived from that activity if the material advisor
207.5 	intentionally failed to act.
207.6 	(d)(1) Any person who fails to include on a return or
207.7 	statement any information with respect to a reportable
207.8 	transaction as required under section 289A.121 is subject to a
207.9 	penalty equal to:
207.10 	(i) $10,000 in the case of an individual and $50,000 in any
207.11 	other case; or 
207.12 	(ii) with respect to a listed transaction, $100,000 in the
207.13 	case of an individual and $200,000 in any other case.
207.14 	(2) For a unitary business in which more than one member
207.15 	fails to include information on its return or statement for the
207.16 	same reportable transaction, the penalty under clause (1) for
207.17 	each additional member that fails to include the required
207.18 	information on its return or statement for the reportable
207.19 	transaction is limited to the following amount:
207.20 	(i) $500 for each member, subject to a maximum additional
207.21 	penalty of $25,000; and 
207.22 	(ii) with respect to a listed transaction, $1,000 for each
207.23 	member, subject to a maximum additional penalty of $100,000.
207.24 	(e) A material advisor required to maintain or provide a
207.25 	list under section 289A.121, subdivision 6, is subject to a
207.26 	penalty equal to $10,000 for each day after the 20th day that
207.27 	the material advisor failed to make the list available to the
207.28 	commissioner after written request for that list was made.  No
207.29 	penalty applies for a failure on any day if the failure is due
207.30 	to reasonable cause.
207.31 	(f) The penalty imposed by this subdivision is in addition
207.32 	to any other penalty imposed under this section.
207.33 	(g) Notwithstanding section 270C.34, the commissioner may
207.34 	abate all or any portion of any penalty imposed by paragraphs
207.35 	(c) and (d) for any violation, only if all of the following
207.36 	apply:
208.1 	(1) the violation is for a reportable transaction, other
208.2 	than a listed transaction; and 
208.3 	(2) abating the penalty would promote compliance with the
208.4 	requirements of chapter 290.
208.5 	(h) Notwithstanding any other law or rule, a determination
208.6 	under paragraph (g) may not be reviewed in any judicial
208.7 	proceeding.
208.8 	
EFFECTIVE DATE. This section is effective for taxable
208.9 	years beginning after December 31, 2000.  For taxable years
208.10 	beginning before January 1, 2005, paragraphs (c) and (d) apply
208.11 	only if disclosure or registration was not made by October 15,
208.12 	2005.

208.13 	Sec. 8. Minnesota Statutes 2004, section 289A.60, is
208.14 	amended by adding a subdivision to read:
208.15 		Subd. 27.Reportable transaction understatement. (a) If
208.16 	a taxpayer has a reportable transaction understatement for any
208.17 	taxable year, an amount equal to 20 percent of the amount of the
208.18 	reportable transaction understatement must be added to the tax.
208.19 	(b)(1) For purposes of this subdivision, "reportable
208.20 	transaction understatement" means the product of:
208.21 	(i) the amount of the increase, if any, in taxable income
208.22 	that results from a difference between the proper tax treatment
208.23 	of an item to which this section applies and the taxpayer's
208.24 	treatment of that item as shown on the taxpayer's tax return;
208.25 	and 
208.26 	(ii) the highest rate of tax imposed on the taxpayer under
208.27 	section 290.06 determined without regard to the understatement.
208.28 	(2) For purposes of clause (1)(i), any reduction of the
208.29 	excess of deductions allowed for the taxable year over gross
208.30 	income for that year, and any reduction in the amount of capital
208.31 	losses which would, without regard to section 1211 of the
208.32 	Internal Revenue Code, be allowed for that year, must be treated
208.33 	as an increase in taxable income.
208.34 	(c) This subdivision applies to any item that is
208.35 	attributable to:
208.36 	(1) any listed transaction under section 289A.121; and 
209.1 	(2) any reportable transaction, other than a listed
209.2 	transaction, if a significant purpose of that transaction is the
209.3 	avoidance or evasion of federal income tax liability.
209.4 	(d) Paragraph (a) applies by substituting "30 percent" for
209.5 	"20 percent" with respect to the portion of any reportable
209.6 	transaction understatement with respect to which the disclosure
209.7 	requirements of section 289A.121, subdivision 5, and section
209.8 	6664(d)(2)(A) of the Internal Revenue Code are not met.
209.9 	(e)(1) No penalty applies under this subdivision with
209.10 	respect to any portion of a reportable transaction
209.11 	understatement if the taxpayer shows that there was reasonable
209.12 	cause for the portion and that the taxpayer acted in good faith
209.13 	with respect to the portion.  This paragraph applies only if:
209.14 	(i) the relevant facts affecting the tax treatment of the
209.15 	item are adequately disclosed as required under section
209.16 	289A.121;
209.17 	(ii) there is or was substantial authority for the
209.18 	treatment; and 
209.19 	(iii) the taxpayer reasonably believed that the treatment
209.20 	was more likely than not the proper treatment.
209.21 	(2) A taxpayer who did not adequately disclose under
209.22 	section 289A.121 meets the requirements of clause (1)(i), if the
209.23 	commissioner abates the penalty under section 270C.34.
209.24 	(3) For purposes of clause (1)(iii), a taxpayer is treated
209.25 	as having a reasonable belief with respect to the tax treatment
209.26 	of an item only if the belief:
209.27 	(i) is based on the facts and law that exist when the
209.28 	return of tax which includes the tax treatment is filed; and 
209.29 	(ii) relates solely to the taxpayer's chances of success on
209.30 	the merits of the treatment and does not take into account the
209.31 	possibility that a return will not be audited, the treatment
209.32 	will not be raised on audit, or the treatment will be resolved
209.33 	through settlement if it is raised.
209.34 	(4) An opinion of a tax advisor may not be relied upon to
209.35 	establish the reasonable belief of a taxpayer if:
209.36 	(i) the tax advisor:
210.1 	(A) is a material advisor, as defined in section 289A.121,
210.2 	and participates in the organization, management, promotion, or
210.3 	sale of the transaction or is related (within the meaning of
210.4 	section 267(b) or 707(b)(1) of the Internal Revenue Code) to any
210.5 	person who so participates;
210.6 	(B) is compensated directly or indirectly by a material
210.7 	advisor with respect to the transaction;
210.8 	(C) has a fee arrangement with respect to the transaction
210.9 	which is contingent on all or part of the intended tax benefits
210.10 	from the transaction being sustained; or 
210.11 	(D) has a disqualifying financial interest with respect to
210.12 	the transaction, as determined under United States Treasury
210.13 	regulations prescribed to implement the provisions of section
210.14 	6664(d)(3)(B)(ii)(IV) of the Internal Revenue Code; or 
210.15 	(ii) the opinion:
210.16 	(A) is based on unreasonable factual or legal assumptions,
210.17 	including assumptions as to future events;
210.18 	(B) unreasonably relies on representations, statements,
210.19 	findings, or agreements of the taxpayer or any other person;
210.20 	(C) does not identify and consider all relevant facts; or 
210.21 	(D) fails to meet any other requirement as the Secretary of
210.22 	the Treasury may prescribe under federal law.
210.23 	(f) The penalty imposed by this subdivision applies in lieu
210.24 	of the penalty imposed under subdivision 4.
210.25 	
EFFECTIVE DATE. This section is effective for taxable
210.26 	years beginning after December 31, 2000.  For taxable years
210.27 	beginning before January 1, 2005, it applies only if disclosure
210.28 	was not made by October 15, 2005, as required by Minnesota
210.29 	Statutes, section 289A.121.

210.30 	Sec. 9. VOLUNTARY COMPLIANCE INITIATIVE.
 210.31 		Subdivision 1.Establishment. The commissioner of
210.32 	revenue shall establish and administer a voluntary compliance
210.33 	initiative for eligible taxpayers under subdivision 3.
210.34 		Subd. 2.Time period; scope. (a) The commissioner shall
210.35 	conduct the voluntary compliance initiative from August 1, 2005,
210.36 	to January 31, 2006, under Minnesota Statutes, sections 270C.03
211.1 	and 270C.34.
211.2 	(b) The voluntary compliance initiative applies to tax
211.3 	liabilities and penalties attributable to an abusive tax
211.4 	avoidance transaction for taxable years beginning before January
211.5 	1, 2005.  An abusive tax avoidance transaction means a listed
211.6 	transaction, a potentially abusive tax shelter, or a reportable
211.7 	transaction as those terms are defined in Minnesota Statutes,
211.8 	section 289A.121.
211.9 		Subd. 3.Eligibility. (a) No person may participate in
211.10 	the voluntary compliance initiative if:
211.11 	(1) the taxpayer was convicted of a crime in connection
211.12 	with an abusive tax avoidance transaction or transactions;
211.13 	(2) a criminal complaint was filed against the taxpayer in
211.14 	connection with an abusive tax avoidance transaction or
211.15 	transactions;
211.16 	(3) the taxpayer is the subject of a criminal investigation
211.17 	in connection with an abusive tax avoidance transaction or
211.18 	transactions;
211.19 	(4) the taxpayer was eligible to participate in the
211.20 	Internal Revenue Service's Offshore Voluntary Compliance
211.21 	Initiative, as set forth in Revenue Procedure 2003-11, and did
211.22 	not participate;
211.23 	(5) the taxpayer was eligible to participate in the
211.24 	Internal Revenue Service's Son of Boss Settlement Initiative
211.25 	promulgated in Internal Revenue Service, Announcement 2004-46,
211.26 	for transactions described in Internal Revenue Service Notice
211.27 	2000-44, 2000-2 Cumulative Bulletin 255, and did not
211.28 	participate; or 
211.29 	(6) the taxpayer does not meet other eligibility conditions
211.30 	established by the commissioner as a condition for participating
211.31 	in the initiative.
211.32 	(b) A person not disqualified under paragraph (a) may
211.33 	participate in the voluntary compliance initiative.
211.34 		Subd. 4.Election; commissioner authority. (a) An
211.35 	eligible taxpayer that meets the requirements of subdivision 3
211.36 	with respect to any taxable year may elect to participate in the
212.1 	voluntary compliance program under either subdivision 5 or 6 for
212.2 	a particular tax avoidance period.  The election must be made
212.3 	separately for each taxable year and in the form and manner
212.4 	prescribed by the commissioner, and once made is irrevocable.
212.5 	(b) The commissioner of revenue may issue forms and
212.6 	instructions and take other actions necessary, including the use
212.7 	of agreements under Minnesota Statutes, section 270C.52, to
212.8 	implement the voluntary compliance initiative.
212.9 	(c) The provisions of this section do not restrict the
212.10 	authority of the commissioner to abate penalties under Minnesota
212.11 	Statutes, section 270C.34, for eligible taxpayers who do not
212.12 	participate in the voluntary compliance initiative.
212.13 		Subd. 5.Participation without right of appeal. (a) A
212.14 	person participating in the voluntary compliance initiative
212.15 	under this subdivision waives the right to an administrative
212.16 	appeal, to a claim for refund, or to file an action in district
212.17 	court or tax court.  The person participating must:
212.18 	(1) file an amended return for each taxable year for which
212.19 	the taxpayer has filed a tax return using an abusive tax
212.20 	avoidance transaction to underreport the taxpayer's tax
212.21 	liability for the taxable year.  Each amended return must report
212.22 	all income from all sources, without regard to the abusive tax
212.23 	avoidance transactions; and 
212.24 	(2) pay taxes and interest due in full, except that the
212.25 	commissioner of revenue may enter into an installment payment
212.26 	agreement under Minnesota Statutes, section 270C.52, before the
212.27 	taxpayer files an amended return.
212.28 	(b) The commissioner of revenue shall abate all penalties
212.29 	imposed under Minnesota Statutes, chapter 289A, which could have
212.30 	been assessed in connection with the use of an abusive tax
212.31 	avoidance transaction, for each taxable year for which the
212.32 	taxpayer elects to participate in the voluntary compliance
212.33 	initiative under this subdivision, to the extent those penalties
212.34 	are a result of underreporting of tax liabilities attributable
212.35 	to the use of abusive tax avoidance transactions, for which a
212.36 	participating person files an amended return in compliance with
213.1 	paragraph (a).
213.2 	(c) No criminal action may be brought against a taxpayer
213.3 	for the taxable years reported under the voluntary compliance
213.4 	initiative with respect to the issues for which a taxpayer
213.5 	voluntarily complies under this section.
213.6 	(d) A person filing an amended return under this
213.7 	subdivision of the voluntary compliance initiative may not file
213.8 	a claim for refund, an administrative appeal, or an action in
213.9 	district court or tax court with regard to the amount of taxes
213.10 	or interest paid with the amended return.  Nothing in this
213.11 	subdivision precludes a taxpayer from filing a claim for credit
213.12 	or refund for the same taxable year in which a tax avoidance
213.13 	transaction was reported if the credit or refund is not
213.14 	attributable to the tax avoidance transaction.
213.15 		Subd. 6.Participation with right of appeal. (a) A
213.16 	person participating in the voluntary compliance initiative who
213.17 	does not waive the right to an administrative appeal, a claim
213.18 	for refund, or an action in district court or tax court must:
213.19 	(1) file an amended return for each taxable year for which
213.20 	the taxpayer has filed a tax return using an abusive tax
213.21 	avoidance transaction to underreport the taxpayer's tax
213.22 	liability for that taxable year.  Each amended return must
213.23 	report all income from all sources, without regard to the
213.24 	abusive tax avoidance transactions; and 
213.25 	(2) pay taxes and interest due in full, except that the
213.26 	commissioner of revenue may enter into an installment payment
213.27 	agreement pursuant to Minnesota Statutes, section 270C.52, prior
213.28 	to the taxpayer filing an amended return.
213.29 	(b) The commissioner of revenue shall abate all penalties
213.30 	imposed under Minnesota Statutes, chapter 289A, except for the
213.31 	penalty for substantial understatement of tax liability under
213.32 	Minnesota Statutes, section 289A.60, subdivision 4, which could
213.33 	have been assessed in connection with the use of an abusive tax
213.34 	avoidance transaction, for each taxable year for which the
213.35 	taxpayer elects to participate in the voluntary compliance
213.36 	initiative under this subdivision, to the extent those penalties
214.1 	apply to underreporting of tax liabilities attributable to the
214.2 	use of abusive tax avoidance transactions for which a
214.3 	participating person files an amended return in compliance with
214.4 	paragraph (a).  The taxpayer may subsequently file a claim for
214.5 	refund or credit under Minnesota Statutes, section 289A.50.
214.6 	(c) No criminal action may be brought against a taxpayer
214.7 	for the taxable years reported under the voluntary compliance
214.8 	initiative with respect to the issues for which a taxpayer
214.9 	voluntarily complies under this section.
214.10 	(d) The taxpayer may file an administrative appeal or an
214.11 	action in district court or tax court only after the earlier of
214.12 	the following occurs:
214.13 	(1) the date the commissioner of revenue takes action on
214.14 	the claim for refund for the taxable year;
214.15 	(2) 180 days after the date of a final determination by the
214.16 	Internal Revenue Service with respect to the transaction or
214.17 	transactions to which Minnesota Statutes, chapter 290, applies;
214.18 	or 
214.19 	(3) four years after the date the claim for refund was
214.20 	filed.
214.21 	(e)(1) The taxpayer is subject to the substantial
214.22 	understatement penalty under Minnesota Statutes, section
214.23 	289A.60, subdivision 4.  The penalty may be assessed:
214.24 	(i) when the commissioner of revenue takes action on the
214.25 	claim for refund; or 
214.26 	(ii) when a federal determination becomes final for the
214.27 	same issue, in which case the penalty must be assessed, and may
214.28 	not be abated, if the penalty was assessed at the federal level.
214.29 	(2) In determining the amount of the underpayment of tax,
214.30 	Code of Federal Regulations, title 26, section 1.6664-2(c)(2),
214.31 	relating to qualified amended returns, applies.  The
214.32 	underpayment is the difference between the amount of tax on the
214.33 	original return or the qualified amended return and the correct
214.34 	amount of tax for the taxable year.  Except in cases covered by
214.35 	clause (1)(ii), where the amount of the federal determination
214.36 	governs, the underpayment must not be less than the amount of
215.1 	the claim for refund filed by the taxpayer that was denied.
215.2 	(3) The penalty is due and payable upon notice and demand
215.3 	by the commissioner of revenue.  Only after the taxpayer has
215.4 	paid all amounts due, including the penalty, and the claim is
215.5 	denied in whole or in part, may the taxpayer file an appeal
215.6 	under Minnesota Statutes, section 270C.34, subdivision 2, which
215.7 	may be filed in conjunction with the appeal under paragraph (d).
215.8 		Subd. 7.Commissioner orders and penalties. After
215.9 	January 31, 2006, the commissioner of revenue may:
215.10 	(1) issue an order of assessment within the time period
215.11 	permitted under Minnesota Statutes, section 289A.38, upon an
215.12 	amended return filed under this section for an underreported
215.13 	amount of tax;
215.14 	(2) impose penalties on an underreported amount of tax on
215.15 	an amended return filed under this section; or 
215.16 	(3) seek initiation of a criminal action against any person
215.17 	based on any underreported amount of tax on an amended return
215.18 	filed under this section.
215.19 		Subd. 8.Penalty relief; exception. For purposes of this
215.20 	section, if the commissioner subsequently determines that the
215.21 	correct amount of Minnesota income tax was not paid for the
215.22 	taxable year for a participant in the voluntary compliance
215.23 	initiative, then the penalty relief under this section does not
215.24 	apply to any portion of the underpayment of tax attributable to
215.25 	a tax avoidance transaction not paid to the state.
215.26 	Subd. 9.[SPECIAL RULES; QUALIFIED FEDERAL INITIATIVE] (a)
215.27 	Notwithstanding any provision of this section to the contrary, a
215.28 	taxpayer who elected to accept a settlement offer under a
215.29 	qualified federal initiative and was subject to federal
215.30 	penalties under the terms of the qualified federal initiative,
215.31 	may participate in the voluntary compliance initiative under
215.32 	subdivision 5 only and is not eligible to participate under
215.33 	subdivision 6.  In addition to the requirements of subdivision 5
215.34 	and any other applicable provision of this section, the taxpayer
215.35 	must pay a penalty equal to one-half of the federal penalty rate
215.36 	that applied under the closing agreement entered into by the
216.1 	taxpayer under the qualified federal initiative multiplied by
216.2 	the Minnesota underpayment attributable to the transaction.
216.3 	(b) "Qualified federal initiative" means:
216.4 	(1) the Internal Revenue Service's Son of Boss Settlement
216.5 	Initiative promulgated in Internal Revenue Service, Announcement
216.6 	2004-46, for transactions described in Internal Revenue Service
216.7 	Notice 2000-44, 2000-2 Cumulative Bulletin 255; and 
216.8 	(2) the Internal Revenue Service's Offshore Voluntary
216.9 	Compliance Initiative, as set forth in Revenue Procedure,
216.10 	2003-11.
216.11 	
EFFECTIVE DATE. This section is effective the day
216.12 	following final enactment.

216.13 	ARTICLE 9
216.14 	DEPARTMENT OF REVENUE ELECTRONIC PAYMENTS

216.15 	Section 1. Minnesota Statutes 2004, section 289A.20,
216.16 	subdivision 2, is amended to read:
216.17 		Subd. 2.Withholding from wages, entertainer withholding,
216.18 	withholding from payments to out-of-state contractors, and
216.19 	withholding by partnerships and small business corporations.
 216.20 	(a) A tax required to be deducted and withheld during the
216.21 	quarterly period must be paid on or before the last day of the
216.22 	month following the close of the quarterly period, unless an
216.23 	earlier time for payment is provided.  A tax required to be
216.24 	deducted and withheld from compensation of an entertainer and
216.25 	from a payment to an out-of-state contractor must be paid on or
216.26 	before the date the return for such tax must be filed under
216.27 	section 289A.18, subdivision 2.  Taxes required to be deducted
216.28 	and withheld by partnerships and S corporations must be paid on
216.29 	or before the date the return must be filed under section
216.30 	289A.18, subdivision 2.
216.31 	(b) An employer who, during the previous quarter, withheld
216.32 	more than $1,500 of tax under section 290.92, subdivision 2a or
216.33 	3, or 290.923, subdivision 2, must deposit tax withheld under
216.34 	those sections with the commissioner within the time allowed to
216.35 	deposit the employer's federal withheld employment taxes under
216.36 	Code of Federal Regulations, title 26, section 31.6302-1, as
217.1 	amended through December 31, 2001, without regard to the safe
217.2 	harbor or de minimis rules in subparagraph (f) or the one-day
217.3 	rule in subsection (c), clause (3).  Taxpayers must submit a
217.4 	copy of their federal notice of deposit status to the
217.5 	commissioner upon request by the commissioner.
217.6 	(c) The commissioner may prescribe by rule other return
217.7 	periods or deposit requirements.  In prescribing the reporting
217.8 	period, the commissioner may classify payors according to the
217.9 	amount of their tax liability and may adopt an appropriate
217.10 	reporting period for the class that the commissioner judges to
217.11 	be consistent with efficient tax collection.  In no event will
217.12 	the duration of the reporting period be more than one year.
217.13 	(d) If less than the correct amount of tax is paid to the
217.14 	commissioner, proper adjustments with respect to both the tax
217.15 	and the amount to be deducted must be made, without interest, in
217.16 	the manner and at the times the commissioner prescribes.  If the
217.17 	underpayment cannot be adjusted, the amount of the underpayment
217.18 	will be assessed and collected in the manner and at the times
217.19 	the commissioner prescribes.
217.20 	(e) If the aggregate amount of the tax withheld during a
217.21 	fiscal year ending June 30 under section 290.92, subdivision 2a
217.22 	or 3,is equal to or exceeds the amounts established for
217.23 	remitting federal withheld taxes pursuant to the regulations
217.24 	promulgated under section 6302(h) of the Internal Revenue Code,:
217.25 	(1) $20,000 or more in the fiscal year ending June 30,
217.26 	2005; or 
217.27 	(2) $10,000 or more in the fiscal year ending June 30,
217.28 	2006, and fiscal years thereafter,
217.29 	the employer must remit each required deposit for wages paid in
217.30 	the subsequent calendar year by electronic means.
217.31 	(f) A third-party bulk filer as defined in section 290.92,
217.32 	subdivision 30, paragraph (a), clause (2), who remits
217.33 	withholding deposits must remit all deposits by electronic means
217.34 	as provided in paragraph (e), regardless of the aggregate amount
217.35 	of tax withheld during a fiscal year for all of the employers.

217.36 	Sec. 2. Minnesota Statutes 2004, section 289A.20,
218.1 	subdivision 4, is amended to read:
218.2 		Subd. 4.Sales and use tax.  (a) The taxes imposed by
218.3 	chapter 297A are due and payable to the commissioner monthly on
218.4 	or before the 20th day of the month following the month in which
218.5 	the taxable event occurred, or following another reporting
218.6 	period as the commissioner prescribes or as allowed under
218.7 	section 289A.18, subdivision 4, paragraph (f) or (g), except
218.8 	that use taxes due on an annual use tax return as provided under
218.9 	section 289A.11, subdivision 1, are payable by April 15
218.10 	following the close of the calendar year.
218.11 	(b) A vendor having a liability of $120,000 or more during
218.12 	a fiscal year ending June 30 must remit the June liability for
218.13 	the next year in the following manner:
218.14 	(1) Two business days before June 30 of the year, the
218.15 	vendor must remit 85 percent of the estimated June liability to
218.16 	the commissioner.
218.17 	(2) On or before August 20 of the year, the vendor must pay
218.18 	any additional amount of tax not remitted in June.
218.19 	(c) A vendor having a liability of $120,000 or more during
218.20 	a fiscal year ending June 30 :
218.21 	(1) $20,000 or more in the fiscal year ending June 30,
218.22 	2005; or 
218.23 	(2) $10,000 or more in the fiscal year ending June 30,
218.24 	2006, and fiscal years thereafter,
218.25 	must remit all liabilities on returns due for periods beginning
218.26 	in the subsequent calendar year by electronic means on or before
218.27 	the 20th day of the month following the month in which the
218.28 	taxable event occurred, or on or before the 20th day of the
218.29 	month following the month in which the sale is reported under
218.30 	section 289A.18, subdivision 4, except for 85 percent of the
218.31 	estimated June liability, which is due two business days before
218.32 	June 30.  The remaining amount of the June liability is due on
218.33 	August 20.

218.34 	Sec. 3. Minnesota Statutes 2004, section 289A.26,
218.35 	subdivision 2a, is amended to read:
218.36 		Subd. 2a.Electronic payments.  If the aggregate amount
219.1 	of estimated tax payments made during a calendar year is equal
219.2 	to or exceeds $20,000,:
219.3 	(1) $20,000 or more in the fiscal year ending June 30,
219.4 	2005; or 
219.5 	(2) $10,000 or more in the fiscal year ending June 30,
219.6 	2006, and fiscal years thereafter,
219.7 	all estimated tax payments in the subsequent calendar year must
219.8 	be paid by electronic means.

219.9 	Sec. 4. Minnesota Statutes 2004, section 295.55,
219.10 	subdivision 4, is amended to read:
219.11 		Subd. 4.Electronic payments.  A taxpayer with an
219.12 	aggregate tax liability of $120,000 or more during a fiscal year
219.13 	ending June 30 :
219.14 	(1) $20,000 or more in the fiscal year ending June 30,
219.15 	2005; or 
219.16 	(2) $10,000 or more in the fiscal year ending June 30,
219.17 	2006, and fiscal years thereafter,
219.18 	must remit all liabilities by electronic means in the subsequent
219.19 	calendar year.

219.20 	Sec. 5. EFFECTIVE DATE.
 219.21 	This article is effective for payments due in calendar year
219.22 	2006, and in calendar years thereafter, based upon liabilities
219.23 	incurred in the fiscal year ending June 30, 2005, and in fiscal
219.24 	years thereafter.

219.25 	ARTICLE 10
219.26 	INTERNATIONAL ECONOMIC DEVELOPMENT ZONE

219.27 	Section 1. Minnesota Statutes 2004, section 272.02, is
219.28 	amended by adding a subdivision to read:
219.29 		Subd. 83.International economic development zone
219.30 	property. (a) Improvements to real property, and personal
219.31 	property, classified under section 273.13, subdivision 24, and
219.32 	located within the international economic development zone
219.33 	designated under section 469.322, are exempt from ad valorem
219.34 	taxes levied under chapter 275, if the improvements are:
219.35 	(1) part of a regional distribution center as defined in
219.36 	section 469.321; or 
220.1 	(2) occupied by a qualified business as defined in section
220.2 	469.321, that uses the improvements primarily in freight
220.3 	forwarding operations.
220.4 	(b) The exemption applies beginning for the first
220.5 	assessment year after designation of the international economic
220.6 	development zone.  The exemption applies to each assessment year
220.7 	that begins during the duration of the international economic
220.8 	development zone.  To be exempt under paragraph (a), clause (2),
220.9 	the property must be occupied by July 1 of the assessment year
220.10 	by a qualified business that has signed the business subsidy
220.11 	agreement by July 1 of the assessment year.
220.12 	
EFFECTIVE DATE. This section is effective beginning for
220.13 	property taxes payable in 2008.

220.14 	Sec. 2. Minnesota Statutes 2004, section 290.01,
220.15 	subdivision 19b, as amended by Laws 2005, chapter 151, article
220.16 	6, section 13, is amended to read:
220.17 		Subd. 19b.Subtractions from federal taxable income. For
220.18 	individuals, estates, and trusts, there shall be subtracted from
220.19 	federal taxable income:
220.20 	(1) net interest income on obligations of any authority,
220.21 	commission, or instrumentality of the United States to the
220.22 	extent includable in taxable income for federal income tax
220.23 	purposes but exempt from state income tax under the laws of the
220.24 	United States;
220.25 	(2) if included in federal taxable income, the amount of
220.26 	any overpayment of income tax to Minnesota or to any other
220.27 	state, for any previous taxable year, whether the amount is
220.28 	received as a refund or as a credit to another taxable year's
220.29 	income tax liability;
220.30 	(3) the amount paid to others, less the amount used to
220.31 	claim the credit allowed under section 290.0674, not to exceed
220.32 	$1,625 for each qualifying child in grades kindergarten to 6 and
220.33 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
220.34 	textbooks, and transportation of each qualifying child in
220.35 	attending an elementary or secondary school situated in
220.36 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
221.1 	wherein a resident of this state may legally fulfill the state's
221.2 	compulsory attendance laws, which is not operated for profit,
221.3 	and which adheres to the provisions of the Civil Rights Act of
221.4 	1964 and chapter 363A.  For the purposes of this clause,
221.5 	"tuition" includes fees or tuition as defined in section
221.6 	290.0674, subdivision 1, clause (1).  As used in this clause,
221.7 	"textbooks" includes books and other instructional materials and
221.8 	equipment purchased or leased for use in elementary and
221.9 	secondary schools in teaching only those subjects legally and
221.10 	commonly taught in public elementary and secondary schools in
221.11 	this state.  Equipment expenses qualifying for deduction
221.12 	includes expenses as defined and limited in section 290.0674,
221.13 	subdivision 1, clause (3).  "Textbooks" does not include
221.14 	instructional books and materials used in the teaching of
221.15 	religious tenets, doctrines, or worship, the purpose of which is
221.16 	to instill such tenets, doctrines, or worship, nor does it
221.17 	include books or materials for, or transportation to,
221.18 	extracurricular activities including sporting events, musical or
221.19 	dramatic events, speech activities, driver's education, or
221.20 	similar programs.  For purposes of the subtraction provided by
221.21 	this clause, "qualifying child" has the meaning given in section
221.22 	32(c)(3) of the Internal Revenue Code;
221.23 	(4) income as provided under section 290.0802;
221.24 	(5) to the extent included in federal adjusted gross
221.25 	income, income realized on disposition of property exempt from
221.26 	tax under section 290.491;
221.27 	(6)
221.28 	to the extent not deducted in determining federal taxable
221.29 	income by an individual who does not itemize deductions for
221.30 	federal income tax purposes for the taxable year, an amount
221.31 	equal to 50 percent of the excess of charitable contributions
221.32 	allowable as a deduction for the taxable year under section
221.33 	170(a) of the Internal Revenue Code over $500 ;
221.34 	(7) for taxable years beginning before January 1, 2008, the
221.35 	amount of the federal small ethanol producer credit allowed
221.36 	under section 40(a)(3) of the Internal Revenue Code which is
222.1 	included in gross income under section 87 of the Internal
222.2 	Revenue Code;
222.3 	(8) for individuals who are allowed a federal foreign tax
222.4 	credit for taxes that do not qualify for a credit under section
222.5 	290.06, subdivision 22, an amount equal to the carryover of
222.6 	subnational foreign taxes for the taxable year, but not to
222.7 	exceed the total subnational foreign taxes reported in claiming
222.8 	the foreign tax credit.  For purposes of this clause, "federal
222.9 	foreign tax credit" means the credit allowed under section 27 of
222.10 	the Internal Revenue Code, and "carryover of subnational foreign
222.11 	taxes" equals the carryover allowed under section 904(c) of the
222.12 	Internal Revenue Code minus national level foreign taxes to the
222.13 	extent they exceed the federal foreign tax credit;
222.14 	(9) in each of the five tax years immediately following the
222.15 	tax year in which an addition is required under subdivision 19a,
222.16 	clause (7), or 19c, clause (15), in the case of a shareholder of
222.17 	a corporation that is an S corporation, an amount equal to
222.18 	one-fifth of the delayed depreciation.  For purposes of this
222.19 	clause, "delayed depreciation" means the amount of the addition
222.20 	made by the taxpayer under subdivision 19a, clause (7), or
222.21 	subdivision 19c, clause (15), in the case of a shareholder of an
222.22 	S corporation, minus the positive value of any net operating
222.23 	loss under section 172 of the Internal Revenue Code generated
222.24 	for the tax year of the addition.  The resulting delayed
222.25 	depreciation cannot be less than zero; and 
222.26 	(10) job opportunity building zone income as provided under
222.27 	section 469.316; and 
222.28 	(11) international economic development zone income as
222.29 	provided under section 469.325.
222.30 	
EFFECTIVE DATE. This section is effective for tax years
222.31 	beginning after December 31, 2006.

222.32 	Sec. 3. Minnesota Statutes 2004, section 290.01,
222.33 	subdivision 29, is amended to read:
222.34 		Subd. 29.Taxable income.  The term "taxable income"
222.35 	means:
222.36 	(1) for individuals, estates, and trusts, the same as
223.1 	taxable net income;
223.2 	(2) for corporations, the taxable net income less
223.3 	(i) the net operating loss deduction under section 290.095;
223.4 	(ii) the dividends received deduction under section 290.21,
223.5 	subdivision 4;
223.6 	(iii) the exemption for operating in a job opportunity
223.7 	building zone under section 469.317; and 
223.8 	(iv) the exemption for operating in a biotechnology and
223.9 	health sciences industry zone under section 469.337; and 
223.10 	(v) the exemption for operating in an international
223.11 	economic development zone under section 469.326.
223.12 	
EFFECTIVE DATE. This section is effective for tax years
223.13 	beginning after December 31, 2006.

223.14 	Sec. 4. Minnesota Statutes 2004, section 290.06,
223.15 	subdivision 2c, is amended to read:
223.16 		Subd. 2c.Schedules of rates for individuals, estates,
223.17 	and trusts.  (a) The income taxes imposed by this chapter upon
223.18 	married individuals filing joint returns and surviving spouses
223.19 	as defined in section 2(a) of the Internal Revenue Code must be
223.20 	computed by applying to their taxable net income the following
223.21 	schedule of rates:
223.22 	(1) On the first $25,680, 5.35 percent;
223.23 	(2) On all over $25,680, but not over $102,030, 7.05
223.24 	percent;
223.25 	(3) On all over $102,030, 7.85 percent.
223.26 	Married individuals filing separate returns, estates, and
223.27 	trusts must compute their income tax by applying the above rates
223.28 	to their taxable income, except that the income brackets will be
223.29 	one-half of the above amounts.
223.30 	(b) The income taxes imposed by this chapter upon unmarried
223.31 	individuals must be computed by applying to taxable net income
223.32 	the following schedule of rates:
223.33 	(1) On the first $17,570, 5.35 percent;
223.34 	(2) On all over $17,570, but not over $57,710, 7.05
223.35 	percent;
223.36 	(3) On all over $57,710, 7.85 percent.
224.1 	(c) The income taxes imposed by this chapter upon unmarried
224.2 	individuals qualifying as a head of household as defined in
224.3 	section 2(b) of the Internal Revenue Code must be computed by
224.4 	applying to taxable net income the following schedule of rates:
224.5 	(1) On the first $21,630, 5.35 percent;
224.6 	(2) On all over $21,630, but not over $86,910, 7.05
224.7 	percent;
224.8 	(3) On all over $86,910, 7.85 percent.
224.9 	(d) In lieu of a tax computed according to the rates set
224.10 	forth in this subdivision, the tax of any individual taxpayer
224.11 	whose taxable net income for the taxable year is less than an
224.12 	amount determined by the commissioner must be computed in
224.13 	accordance with tables prepared and issued by the commissioner
224.14 	of revenue based on income brackets of not more than $100.  The
224.15 	amount of tax for each bracket shall be computed at the rates
224.16 	set forth in this subdivision, provided that the commissioner
224.17 	may disregard a fractional part of a dollar unless it amounts to
224.18 	50 cents or more, in which case it may be increased to $1.
224.19 	(e) An individual who is not a Minnesota resident for the
224.20 	entire year must compute the individual's Minnesota income tax
224.21 	as provided in this subdivision.  After the application of the
224.22 	nonrefundable credits provided in this chapter, the tax
224.23 	liability must then be multiplied by a fraction in which:
224.24 	(1) the numerator is the individual's Minnesota source
224.25 	federal adjusted gross income as defined in section 62 of the
224.26 	Internal Revenue Code and increased by the additions required
224.27 	under section 290.01, subdivision 19a, clauses (1), (5), and
224.28 	(6), and reduced by the subtraction under section 290.01,
224.29 	subdivision 19b, clause clauses (10) and (11), and the Minnesota
224.30 	assignable portion of the subtraction for United States
224.31 	government interest under section 290.01, subdivision 19b,
224.32 	clause (1), after applying the allocation and assignability
224.33 	provisions of section 290.081, clause (a), or 290.17; and
224.34 	(2) the denominator is the individual's federal adjusted
224.35 	gross income as defined in section 62 of the Internal Revenue
224.36 	Code of 1986, increased by the amounts specified in section
225.1 	290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
225.2 	by the amounts specified in section 290.01, subdivision 19b,
225.3 	clauses (1), (10),and (11).
225.4 	
EFFECTIVE DATE. This section is effective for tax years
225.5 	beginning after December 31, 2006.

225.6 	Sec. 5. Minnesota Statutes 2004, section 290.06, is
225.7 	amended by adding a subdivision to read:
225.8 		Subd. 32.International economic development zone job
225.9 	credit. A taxpayer that is a qualified business, as defined in
225.10 	section 469.321, subdivision 6, is allowed a credit as
225.11 	determined under section 469.327 against the tax imposed by this
225.12 	chapter.
225.13 	
EFFECTIVE DATE. This section is effective the day
225.14 	following final enactment.

225.15 	Sec. 6. Minnesota Statutes 2004, section 290.067,
225.16 	subdivision 1, is amended to read:
225.17 		Subdivision 1.Amount of credit.  (a) A taxpayer may take
225.18 	as a credit against the tax due from the taxpayer and a spouse,
225.19 	if any, under this chapter an amount equal to the dependent care
225.20 	credit for which the taxpayer is eligible pursuant to the
225.21 	provisions of section 21 of the Internal Revenue Code subject to
225.22 	the limitations provided in subdivision 2 except that in
225.23 	determining whether the child qualified as a dependent, income
225.24 	received as a Minnesota family investment program grant or
225.25 	allowance to or on behalf of the child must not be taken into
225.26 	account in determining whether the child received more than half
225.27 	of the child's support from the taxpayer, and the provisions of
225.28 	section 32(b)(1)(D) of the Internal Revenue Code do not apply.
225.29 	(b) If a child who has not attained the age of six years at
225.30 	the close of the taxable year is cared for at a licensed family
225.31 	day care home operated by the child's parent, the taxpayer is
225.32 	deemed to have paid employment-related expenses.  If the child
225.33 	is 16 months old or younger at the close of the taxable year,
225.34 	the amount of expenses deemed to have been paid equals the
225.35 	maximum limit for one qualified individual under section 21(c)
225.36 	and (d) of the Internal Revenue Code.  If the child is older
226.1 	than 16 months of age but has not attained the age of six years
226.2 	at the close of the taxable year, the amount of expenses deemed
226.3 	to have been paid equals the amount the licensee would charge
226.4 	for the care of a child of the same age for the same number of
226.5 	hours of care.
226.6 	(c) If a married couple:
226.7 	(1) has a child who has not attained the age of one year at
226.8 	the close of the taxable year;
226.9 	(2) files a joint tax return for the taxable year; and
226.10 	(3) does not participate in a dependent care assistance
226.11 	program as defined in section 129 of the Internal Revenue Code,
226.12 	in lieu of the actual employment related expenses paid for that
226.13 	child under paragraph (a) or the deemed amount under paragraph
226.14 	(b), the lesser of (i) the combined earned income of the couple
226.15 	or (ii) the amount of the maximum limit for one qualified
226.16 	individual under section 21(c) and (d) of the Internal Revenue
226.17 	Code will be deemed to be the employment related expense paid
226.18 	for that child.  The earned income limitation of section 21(d)
226.19 	of the Internal Revenue Code shall not apply to this deemed
226.20 	amount.  These deemed amounts apply regardless of whether any
226.21 	employment-related expenses have been paid.
226.22 	(d) If the taxpayer is not required and does not file a
226.23 	federal individual income tax return for the tax year, no credit
226.24 	is allowed for any amount paid to any person unless:
226.25 	(1) the name, address, and taxpayer identification number
226.26 	of the person are included on the return claiming the credit; or
226.27 	(2) if the person is an organization described in section
226.28 	501(c)(3) of the Internal Revenue Code and exempt from tax under
226.29 	section 501(a) of the Internal Revenue Code, the name and
226.30 	address of the person are included on the return claiming the
226.31 	credit.
226.32 	In the case of a failure to provide the information required
226.33 	under the preceding sentence, the preceding sentence does not
226.34 	apply if it is shown that the taxpayer exercised due diligence
226.35 	in attempting to provide the information required.
226.36 	In the case of a nonresident, part-year resident, or a
227.1 	person who has earned income not subject to tax under this
227.2 	chapter including earned income excluded pursuant to section
227.3 	290.01, subdivision 19b, clause (10) or (11), the credit
227.4 	determined under section 21 of the Internal Revenue Code must be
227.5 	allocated based on the ratio by which the earned income of the
227.6 	claimant and the claimant's spouse from Minnesota sources bears
227.7 	to the total earned income of the claimant and the claimant's
227.8 	spouse.
227.9 	
EFFECTIVE DATE. This section is effective for tax years
227.10 	beginning after December 31, 2006.

227.11 	Sec. 7. Minnesota Statutes 2004, section 290.0671,
227.12 	subdivision 1, is amended to read:
227.13 		Subdivision 1.Credit allowed.  (a) An individual is
227.14 	allowed a credit against the tax imposed by this chapter equal
227.15 	to a percentage of earned income.  To receive a credit, a
227.16 	taxpayer must be eligible for a credit under section 32 of the
227.17 	Internal Revenue Code.
227.18 	(b) For individuals with no qualifying children, the credit
227.19 	equals 1.9125 percent of the first $4,620 of earned income.  The
227.20 	credit is reduced by 1.9125 percent of earned income or modified
227.21 	adjusted gross income, whichever is greater, in excess of
227.22 	$5,770, but in no case is the credit less than zero.
227.23 	(c) For individuals with one qualifying child, the credit
227.24 	equals 8.5 percent of the first $6,920 of earned income and 8.5
227.25 	percent of earned income over $12,080 but less than $13,450.
227.26 	The credit is reduced by 5.73 percent of earned income or
227.27 	modified adjusted gross income, whichever is greater, in excess
227.28 	of $15,080, but in no case is the credit less than zero.
227.29 	(d) For individuals with two or more qualifying children,
227.30 	the credit equals ten percent of the first $9,720 of earned
227.31 	income and 20 percent of earned income over $14,860 but less
227.32 	than $16,800.  The credit is reduced by 10.3 percent of earned
227.33 	income or modified adjusted gross income, whichever is greater,
227.34 	in excess of $17,890, but in no case is the credit less than
227.35 	zero.
227.36 	(e) For a nonresident or part-year resident, the credit
228.1 	must be allocated based on the percentage calculated under
228.2 	section 290.06, subdivision 2c, paragraph (e).
228.3 	(f) For a person who was a resident for the entire tax year
228.4 	and has earned income not subject to tax under this chapter,
228.5 	including income excluded under section 290.01, subdivision 19b,
228.6 	clause (10) or (11), the credit must be allocated based on the
228.7 	ratio of federal adjusted gross income reduced by the earned
228.8 	income not subject to tax under this chapter over federal
228.9 	adjusted gross income.
228.10 	(g) For tax years beginning after December 31, 2001, and
228.11 	before December 31, 2004, the $5,770 in paragraph (b), the
228.12 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
228.13 	after being adjusted for inflation under subdivision 7, are each
228.14 	increased by $1,000 for married taxpayers filing joint returns.
228.15 	(h) For tax years beginning after December 31, 2004, and
228.16 	before December 31, 2007, the $5,770 in paragraph (b), the
228.17 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
228.18 	after being adjusted for inflation under subdivision 7, are each
228.19 	increased by $2,000 for married taxpayers filing joint returns.
228.20 	(i) For tax years beginning after December 31, 2007, and
228.21 	before December 31, 2010, the $5,770 in paragraph (b), the
228.22 	$15,080 in paragraph (c), and the $17,890 in paragraph (d),
228.23 	after being adjusted for inflation under subdivision 7, are each
228.24 	increased by $3,000 for married taxpayers filing joint returns.
228.25 	For tax years beginning after December 31, 2008, the $3,000 is
228.26 	adjusted annually for inflation under subdivision 7.
228.27 	(j) The commissioner shall construct tables showing the
228.28 	amount of the credit at various income levels and make them
228.29 	available to taxpayers.  The tables shall follow the schedule
228.30 	contained in this subdivision, except that the commissioner may
228.31 	graduate the transition between income brackets.
228.32 	
EFFECTIVE DATE. This section is effective for tax years
228.33 	beginning after December 31, 2006.

228.34 	Sec. 8. Minnesota Statutes 2004, section 290.091,
228.35 	subdivision 2, is amended to read:
228.36 		Subd. 2.Definitions.  For purposes of the tax imposed by
229.1 	this section, the following terms have the meanings given:
229.2 	(a) "Alternative minimum taxable income" means the sum of
229.3 	the following for the taxable year:
229.4 	(1) the taxpayer's federal alternative minimum taxable
229.5 	income as defined in section 55(b)(2) of the Internal Revenue
229.6 	Code;
229.7 	(2) the taxpayer's itemized deductions allowed in computing
229.8 	federal alternative minimum taxable income, but excluding:
229.9 	(i) the charitable contribution deduction under section 170
229.10 	of the Internal Revenue Code to the extent that the deduction
229.11 	exceeds 1.0 percent of adjusted gross income, as defined in
229.12 	section 62 of the Internal Revenue Code;
229.13 	(ii) the medical expense deduction;
229.14 	(iii) the casualty, theft, and disaster loss deduction; and
229.15 	(iv) the impairment-related work expenses of a disabled
229.16 	person;
229.17 	(3) for depletion allowances computed under section 613A(c)
229.18 	of the Internal Revenue Code, with respect to each property (as
229.19 	defined in section 614 of the Internal Revenue Code), to the
229.20 	extent not included in federal alternative minimum taxable
229.21 	income, the excess of the deduction for depletion allowable
229.22 	under section 611 of the Internal Revenue Code for the taxable
229.23 	year over the adjusted basis of the property at the end of the
229.24 	taxable year (determined without regard to the depletion
229.25 	deduction for the taxable year);
229.26 	(4) to the extent not included in federal alternative
229.27 	minimum taxable income, the amount of the tax preference for
229.28 	intangible drilling cost under section 57(a)(2) of the Internal
229.29 	Revenue Code determined without regard to subparagraph (E);
229.30 	(5) to the extent not included in federal alternative
229.31 	minimum taxable income, the amount of interest income as
229.32 	provided by section 290.01, subdivision 19a, clause (1); and
229.33 	(6) the amount of addition required by section 290.01,
229.34 	subdivision 19a, clause (7);
229.35 	less the sum of the amounts determined under the following:
229.36 	(1) interest income as defined in section 290.01,
230.1 	subdivision 19b, clause (1);
230.2 	(2) an overpayment of state income tax as provided by
230.3 	section 290.01, subdivision 19b, clause (2), to the extent
230.4 	included in federal alternative minimum taxable income;
230.5 	(3) the amount of investment interest paid or accrued
230.6 	within the taxable year on indebtedness to the extent that the
230.7 	amount does not exceed net investment income, as defined in
230.8 	section 163(d)(4) of the Internal Revenue Code.  Interest does
230.9 	not include amounts deducted in computing federal adjusted gross
230.10 	income; and
230.11 	(4) amounts subtracted from federal taxable income as
230.12 	provided by section 290.01, subdivision 19b, clauses (9),(10),
230.13 	and (11).
230.14 	In the case of an estate or trust, alternative minimum
230.15 	taxable income must be computed as provided in section 59(c) of
230.16 	the Internal Revenue Code.
230.17 	(b) "Investment interest" means investment interest as
230.18 	defined in section 163(d)(3) of the Internal Revenue Code.
230.19 	(c) "Tentative minimum tax" equals 6.4 percent of
230.20 	alternative minimum taxable income after subtracting the
230.21 	exemption amount determined under subdivision 3.
230.22 	(d) "Regular tax" means the tax that would be imposed under
230.23 	this chapter (without regard to this section and section
230.24 	290.032), reduced by the sum of the nonrefundable credits
230.25 	allowed under this chapter.
230.26 	(e) "Net minimum tax" means the minimum tax imposed by this
230.27 	section.
230.28 	
EFFECTIVE DATE. This section is effective for tax years
230.29 	beginning after December 31, 2006.

230.30 	Sec. 9. Minnesota Statutes 2004, section 290.0921,
230.31 	subdivision 3, is amended to read:
230.32 		Subd. 3.Alternative minimum taxable income.
 230.33 	"Alternative minimum taxable income" is Minnesota net income as
230.34 	defined in section 290.01, subdivision 19, and includes the
230.35 	adjustments and tax preference items in sections 56, 57, 58, and
230.36 	59(d), (e), (f), and (h) of the Internal Revenue Code.  If a
231.1 	corporation files a separate company Minnesota tax return, the
231.2 	minimum tax must be computed on a separate company basis.  If a
231.3 	corporation is part of a tax group filing a unitary return, the
231.4 	minimum tax must be computed on a unitary basis.  The following
231.5 	adjustments must be made.
231.6 	(1) For purposes of the depreciation adjustments under
231.7 	section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code,
231.8 	the basis for depreciable property placed in service in a
231.9 	taxable year beginning before January 1, 1990, is the adjusted
231.10 	basis for federal income tax purposes, including any
231.11 	modification made in a taxable year under section 290.01,
231.12 	subdivision 19e, or Minnesota Statutes 1986, section 290.09,
231.13 	subdivision 7, paragraph (c).
231.14 	For taxable years beginning after December 31, 2000, the
231.15 	amount of any remaining modification made under section 290.01,
231.16 	subdivision 19e, or Minnesota Statutes 1986, section 290.09,
231.17 	subdivision 7, paragraph (c), not previously deducted is a
231.18 	depreciation allowance in the first taxable year after December
231.19 	31, 2000.
231.20 	(2) The portion of the depreciation deduction allowed for
231.21 	federal income tax purposes under section 168(k) of the Internal
231.22 	Revenue Code that is required as an addition under section
231.23 	290.01, subdivision 19c, clause (16), is disallowed in
231.24 	determining alternative minimum taxable income.
231.25 	(3) The subtraction for depreciation allowed under section
231.26 	290.01, subdivision 19d, clause (19), is allowed as a
231.27 	depreciation deduction in determining alternative minimum
231.28 	taxable income.
231.29 	(4) The alternative tax net operating loss deduction under
231.30 	sections 56(a)(4) and 56(d) of the Internal Revenue Code does
231.31 	not apply.
231.32 	(5) The special rule for certain dividends under section
231.33 	56(g)(4)(C)(ii) of the Internal Revenue Code does not apply.
231.34 	(6) The special rule for dividends from section 936
231.35 	companies under section 56(g)(4)(C)(iii) does not apply.
231.36 	(7) The tax preference for depletion under section 57(a)(1)
232.1 	of the Internal Revenue Code does not apply.
232.2 	(8) The tax preference for intangible drilling costs under
232.3 	section 57(a)(2) of the Internal Revenue Code must be calculated
232.4 	without regard to subparagraph (E) and the subtraction under
232.5 	section 290.01, subdivision 19d, clause (4).
232.6 	(9) The tax preference for tax exempt interest under
232.7 	section 57(a)(5) of the Internal Revenue Code does not apply.
232.8 	(10) The tax preference for charitable contributions of
232.9 	appreciated property under section 57(a)(6) of the Internal
232.10 	Revenue Code does not apply.
232.11 	(11) For purposes of calculating the tax preference for
232.12 	accelerated depreciation or amortization on certain property
232.13 	placed in service before January 1, 1987, under section 57(a)(7)
232.14 	of the Internal Revenue Code, the deduction allowable for the
232.15 	taxable year is the deduction allowed under section 290.01,
232.16 	subdivision 19e.
232.17 	For taxable years beginning after December 31, 2000, the
232.18 	amount of any remaining modification made under section 290.01,
232.19 	subdivision 19e, not previously deducted is a depreciation or
232.20 	amortization allowance in the first taxable year after December
232.21 	31, 2004.
232.22 	(12) For purposes of calculating the adjustment for
232.23 	adjusted current earnings in section 56(g) of the Internal
232.24 	Revenue Code, the term "alternative minimum taxable income" as
232.25 	it is used in section 56(g) of the Internal Revenue Code, means
232.26 	alternative minimum taxable income as defined in this
232.27 	subdivision, determined without regard to the adjustment for
232.28 	adjusted current earnings in section 56(g) of the Internal
232.29 	Revenue Code.
232.30 	(13) For purposes of determining the amount of adjusted
232.31 	current earnings under section 56(g)(3) of the Internal Revenue
232.32 	Code, no adjustment shall be made under section 56(g)(4) of the
232.33 	Internal Revenue Code with respect to (i) the amount of foreign
232.34 	dividend gross-up subtracted as provided in section 290.01,
232.35 	subdivision 19d, clause (1), (ii) the amount of refunds of
232.36 	income, excise, or franchise taxes subtracted as provided in
233.1 	section 290.01, subdivision 19d, clause (10), or (iii) the
233.2 	amount of royalties, fees or other like income subtracted as
233.3 	provided in section 290.01, subdivision 19d, clause (11).
233.4 	(14) Alternative minimum taxable income excludes the income
233.5 	from operating in a job opportunity building zone as provided
233.6 	under section 469.317.
233.7 	(15) Alternative minimum taxable income excludes the income
233.8 	from operating in a biotechnology and health sciences industry
233.9 	zone as provided under section 469.337.
233.10 	(16) Alternative minimum taxable income excludes the income
233.11 	from operating in an international economic development zone as
233.12 	provided under section 469.326.
233.13 	Items of tax preference must not be reduced below zero as a
233.14 	result of the modifications in this subdivision.
233.15 	
EFFECTIVE DATE. This section is effective for tax years
233.16 	beginning after December 31, 2006.

233.17 	Sec. 10. Minnesota Statutes 2004, section 290.0922,
233.18 	subdivision 2, is amended to read:
233.19 		Subd. 2.Exemptions.  The following entities are exempt
233.20 	from the tax imposed by this section:
233.21 	(1) corporations exempt from tax under section 290.05;
233.22 	(2) real estate investment trusts;
233.23 	(3) regulated investment companies or a fund thereof; and
233.24 	(4) entities having a valid election in effect under
233.25 	section 860D(b) of the Internal Revenue Code;
233.26 	(5) town and farmers' mutual insurance companies;
233.27 	(6) cooperatives organized under chapter 308A that provide
233.28 	housing exclusively to persons age 55 and over and are
233.29 	classified as homesteads under section 273.124, subdivision 3;
233.30 	and 
233.31 	(7) an entity, if for the taxable year all of its property
233.32 	is located in a job opportunity building zone designated under
233.33 	section 469.314 and all of its payroll is a job opportunity
233.34 	building zone payroll under section 469.310; and 
233.35 	(8) an entity, if for the taxable year all of its property
233.36 	is located in an international economic development zone
234.1 	designated under section 469.322, and all of its payroll is
234.2 	international economic development zone payroll under section
234.3 	469.321.
234.4 	Entities not specifically exempted by this subdivision are
234.5 	subject to tax under this section, notwithstanding section
234.6 	290.05.
234.7 	
EFFECTIVE DATE. This section is effective for tax years
234.8 	beginning after December 31, 2006.

234.9 	Sec. 11. Minnesota Statutes 2004, section 290.0922,
234.10 	subdivision 3, is amended to read:
234.11 		Subd. 3.Definitions.  (a) "Minnesota sales or receipts"
234.12 	means the total sales apportioned to Minnesota pursuant to
234.13 	section 290.191, subdivision 5, the total receipts attributed to
234.14 	Minnesota pursuant to section 290.191, subdivisions 6 to 8,
234.15 	and/or the total sales or receipts apportioned or attributed to
234.16 	Minnesota pursuant to any other apportionment formula applicable
234.17 	to the taxpayer.
234.18 	(b) "Minnesota property" means total Minnesota tangible
234.19 	property as provided in section 290.191, subdivisions 9 to 11,
234.20 	any other tangible property located in Minnesota, but does not
234.21 	include property located in a job opportunity building zone
234.22 	designated under section 469.314,or property of a qualified
234.23 	business located in a biotechnology and health sciences industry
234.24 	zone designated under section 469.334, or property of a
234.25 	qualified business located in the international economic
234.26 	development zone designated under section 469.322.  Intangible
234.27 	property shall not be included in Minnesota property for
234.28 	purposes of this section.  Taxpayers who do not utilize tangible
234.29 	property to apportion income shall nevertheless include
234.30 	Minnesota property for purposes of this section.  On a return
234.31 	for a short taxable year, the amount of Minnesota property
234.32 	owned, as determined under section 290.191, shall be included in
234.33 	Minnesota property based on a fraction in which the numerator is
234.34 	the number of days in the short taxable year and the denominator
234.35 	is 365.
234.36 	(c) "Minnesota payrolls" means total Minnesota payrolls as
235.1 	provided in section 290.191, subdivision 12, but does not
235.2 	include job opportunity building zone payrolls under section
235.3 	469.310, subdivision 8, or biotechnology and health sciences
235.4 	industry zone payroll payrolls under section 469.330,
235.5 	subdivision 8, or international economic development zone
235.6 	payrolls under section 469.321, subdivision 9.  Taxpayers who do
235.7 	not utilize payrolls to apportion income shall nevertheless
235.8 	include Minnesota payrolls for purposes of this section.
235.9 	
EFFECTIVE DATE. This section is effective for tax years
235.10 	beginning after December 31, 2006.

235.11 	Sec. 12. Minnesota Statutes 2004, section 297A.68, is
235.12 	amended by adding a subdivision to read:
235.13 		Subd. 40.International economic development zones. (a)
235.14 	Purchases of tangible personal property or taxable services by a
235.15 	qualified business, as defined in section 469.321, are exempt if
235.16 	the property or services are primarily used or consumed in the
235.17 	international economic development zone designated under section
235.18 	469.322.
235.19 	(b) Purchase and use of construction materials, supplies,
235.20 	and equipment incorporated into the construction of improvements
235.21 	to real property in the international economic development zone
235.22 	are exempt if the improvements after completion of construction
235.23 	are to be used as a regional distribution center as defined in
235.24 	section 469.321 or otherwise used in the conduct of freight
235.25 	forwarding activities of a qualified business as defined in
235.26 	section 469.321.  This exemption applies regardless of whether
235.27 	the purchases are made by the business or a contractor.
235.28 	(c) The exemptions under this subdivision apply to a local
235.29 	sales and use tax, regardless of whether the local tax is
235.30 	imposed on sales taxable under this chapter or in another law,
235.31 	ordinance, or charter provision.
235.32 	(d) The exemption in paragraph (a) applies to sales during
235.33 	the duration of the zone and after June 30, 2007, if the
235.34 	purchase was made and delivery received after the business signs
235.35 	the business subsidy agreement required under chapter 469.
235.36 	(e) For purchases made for improvements to real property to
236.1 	be occupied by a business that has not signed a business subsidy
236.2 	agreement at the time of the purchase, the tax must be imposed
236.3 	and collected as if the rate under section 297A.62, subdivision
236.4 	1, applied, and then refunded in the manner provided in section
236.5 	297A.75 beginning in fiscal year 2008.  The taxpayer must attach
236.6 	to the claim for refund information sufficient for the
236.7 	commissioner to be able to determine that the improvements are
236.8 	being occupied by a business that has signed a business subsidy
236.9 	agreement.
236.10 	
EFFECTIVE DATE. This section is effective the day
236.11 	following final enactment.

236.12 	Sec. 13. [469.321] DEFINITIONS.
236.13 		Subdivision 1.Scope. For purposes of sections 469.321
236.14 	to 469.328, the following terms have the meanings given.
236.15 		Subd. 2.Foreign trade zone. "Foreign trade zone" means
236.16 	a foreign trade zone designated pursuant to United States Code,
236.17 	title 19, section 81a, for the right to use the powers provided
236.18 	in United States Code, title 19, sections 81a to 81u, or a
236.19 	subzone authorized by the foreign trade zone.
236.20 		Subd. 3.Foreign trade zone authority. "Foreign trade
236.21 	zone authority" means the Greater Metropolitan Foreign Trade
236.22 	Zone Commission number 119, a joint powers authority created by
236.23 	the county of Hennepin, the cities of Minneapolis and
236.24 	Bloomington, and the Metropolitan Airports Commission, under the
236.25 	authority of section 469.059, 469.101, or 471.59, and includes
236.26 	any other political subdivisions that enter into the authority
236.27 	after its creation, as well as the county in which the zone is
236.28 	located.  Notwithstanding Minnesota Statutes, section 471.59,
236.29 	the members of the authority are not required to have separate
236.30 	authority to establish or operate a foreign trade zone.
236.31 		Subd. 4.International economic development zone or
236.32 	zone. An "international economic development zone" or "zone" is
236.33 	a zone so designated under section 469.322.
236.34 		Subd. 5.Person. "Person" includes an individual,
236.35 	corporation, partnership, limited liability company,
236.36 	association, or any other entity.
237.1 		Subd. 6.Qualified business. "Qualified business" means
237.2 	a person who has signed a business subsidy agreement as required
237.3 	under sections 116J.993 to 116J.995 and 469.323, subdivision 4,
237.4 	carrying on a trade or business at a place of business located
237.5 	within the international economic development zone that is:
237.6 	(1)(i) engaged in the furtherance of international export
237.7 	or import of goods as a freight forwarder; and (ii) certified by
237.8 	the foreign trade zone authority as a trade or business that
237.9 	furthers the purpose of developing international distribution
237.10 	capacity and capability; or 
237.11 	(2) the owner or operator of a regional distribution center.
237.12 		Subd. 7.Regional distribution center. A "regional
237.13 	distribution center" is a distribution center developed within a
237.14 	foreign trade zone.  The regional distribution center must have
237.15 	as its primary purpose, the facilitation of the gathering of
237.16 	freight for the purpose of centralizing the functions necessary
237.17 	for the shipment of freight in international commerce,
237.18 	including, but not limited to, security and customs functions.
237.19 		Subd. 8.International economic development zone
237.20 	percentage or zone percentage. "International economic
237.21 	development zone percentage" or "zone percentage" means the
237.22 	following fraction reduced to a percentage:
237.23 	(1) the numerator of the fraction is:
237.24 	(i) the ratio of the taxpayer's property factor under
237.25 	section 290.191 located in the zone for the taxable year which
237.26 	is land, buildings, machinery and equipment, inventories, and
237.27 	other tangible personal property that is a regional distribution
237.28 	center or is used in the furtherance of the taxpayer's freight
237.29 	forwarding operations over the property factor numerator
237.30 	determined under section 290.191, plus 
237.31 	(ii) the ratio of the taxpayer's international economic
237.32 	development zone payroll factor under subdivision 9 over the
237.33 	payroll factor numerator determined under section 290.191; and 
237.34 	(2) the denominator of the fraction is two.
237.35 	When calculating the zone percentage for a business that is
237.36 	part of a unitary business as defined under section 290.17,
238.1 	subdivision 4, the denominator of the payroll and property
238.2 	factors is the Minnesota payroll and property of the unitary
238.3 	business as reported on the combined report under section
238.4 	290.17, subdivision 4, paragraph (j).
238.5 		Subd. 9.International economic development zone payroll
238.6 	factor or international economic development zone payroll.
 238.7 	"International economic development zone payroll factor" or
238.8 	"international economic development zone payroll" is that
238.9 	portion of the payroll factor under section 290.191 used to
238.10 	operate a regional distribution center, or used in the
238.11 	furtherance of the taxpayer's freight forwarding operations that
238.12 	represents:
238.13 	(1) wages or salaries paid to an individual for services
238.14 	performed in the international economic development zone; or 
238.15 	(2) wages or salaries paid to individuals working from
238.16 	offices within the international economic development zone, if
238.17 	their employment requires them to work outside the zone and the
238.18 	work is incidental to the work performed by the individual
238.19 	within the zone.  However, in no case does zone payroll include
238.20 	wages paid for work performed outside the zone of an employee
238.21 	who performs more than ten percent of total services for the
238.22 	employer outside the zone.
238.23 		Subd. 10.Freight forwarder. "Freight forwarder" is a
238.24 	business that, for compensation, ensures that goods produced or
238.25 	sold by another business move from point of origin to point of
238.26 	destination.
238.27 	
EFFECTIVE DATE. This section is effective the day
238.28 	following final enactment.

238.29 	Sec. 14. [469.3215] APPLICATION FOR DESIGNATION.
238.30 		Subdivision 1.Who may apply. One or more local
238.31 	government units, or a joint powers board under section 471.59,
238.32 	acting on behalf of two or more units, may apply for designation
238.33 	of an area as an international economic development zone.  All
238.34 	or part of the area proposed for designation as a zone must be
238.35 	located within the boundaries of each of the governmental
238.36 	units.  A local government unit may not submit or have submitted
239.1 	on its behalf more than one application for designation of an
239.2 	international economic development zone.
239.3 		Subd. 2.Application content. (a) The application must
239.4 	include:
239.5 	(1) a resolution or ordinance adopted by each of the cities
239.6 	or towns and the counties in which the zone is located, agreeing
239.7 	to provide all of the local tax exemptions provided under
239.8 	section 469.315;
239.9 	(2) an agreement by the applicant to treat incentives
239.10 	provided under the zone designation as business subsidies under
239.11 	sections 116J.993 to 116J.995 and to comply with the
239.12 	requirements of that law; and 
239.13 	(3) supporting evidence to allow the authority to evaluate
239.14 	the application.
239.15 	(b) Applications must be submitted to the authority no
239.16 	later than December 31, 2005.
239.17 	
EFFECTIVE DATE. This section is effective the day
239.18 	following final enactment.

239.19 	Sec. 15. [469.322] DESIGNATION OF INTERNATIONAL ECONOMIC
239.20 	DEVELOPMENT ZONE.
239.21 	(a) An area designated as a foreign trade zone may be
239.22 	designated by the foreign trade zone authority as an
239.23 	international economic development zone if within the zone a
239.24 	regional distribution center is being developed pursuant to
239.25 	section 469.323.  The zone must consist of contiguous area of
239.26 	not less than 500 acres and not more than 1,000 acres.  The
239.27 	designation authority under this section is limited to one zone.
239.28 	(b) In making the designation, the foreign trade zone
239.29 	authority, in consultation with the Minnesota Department of
239.30 	Transportation and the Metropolitan Council, shall consider
239.31 	access to major transportation routes, consistency with current
239.32 	state transportation and air cargo planning, adequacy of the
239.33 	size of the site, access to airport facilities, present and
239.34 	future capacity at the designated airport, the capability to
239.35 	meet integrated present and future air cargo, security, and
239.36 	inspection services, and access to other infrastructure and
240.1 	financial incentives.  The border of the international economic
240.2 	development zone must be no more than 60 miles distant or 90
240.3 	minutes drive time from the border of the Minneapolis-St. Paul
240.4 	International Airport.
240.5 	(c) Final zone designation must be made by June 30, 2006.
240.6 	(d) Duration of the zone is a 12-year period beginning on
240.7 	January 1, 2007.

240.8 	EFFECTIVE DATE. This section is effective the day
240.9 	following final enactment.

240.10 	Sec. 16. [469.323] FOREIGN TRADE ZONE AUTHORITY POWERS.
240.11 		Subdivision 1.Development of regional distribution
240.12 	center. The foreign trade zone authority is responsible for
240.13 	creating and implementing a development plan for the regional
240.14 	distribution center.  The regional distribution center must be
240.15 	developed with the purpose of expanding, on a regional basis,
240.16 	international distribution capacity and capability.  The foreign
240.17 	trade zone authority shall consult only with municipalities that
240.18 	have indicated to the authority an interest in locating the
240.19 	international economic development zone within their boundaries,
240.20 	as well as interested businesses, potential financiers, and
240.21 	appropriate state and federal agencies.
240.22 		Subd. 2.Business plan. Before designation of an
240.23 	international economic development zone under section 469.322,
240.24 	the governing body of the foreign trade zone authority shall
240.25 	prepare a business plan.  The plan must include an analysis of
240.26 	the economic feasibility of the regional distribution center
240.27 	once it becomes operational and of the operations of freight
240.28 	forwarders and other businesses that choose to locate within the
240.29 	boundaries of the zone.  The analysis must provide profitability
240.30 	models that:
240.31 	(1) include the benefits of the incentives;
240.32 	(2) estimate the amount of time needed to achieve
240.33 	profitability; and 
240.34 	(3) analyze the length of time incentives will be necessary
240.35 	to the economic viability of the regional distribution center.
240.36 	If the governing body of the foreign trade authority
241.1 	determines that the models do not establish the economic
241.2 	feasibility of the project, the regional distribution center
241.3 	does not meet the development requirements of this section and
241.4 	section 469.322.
241.5 		Subd. 3.Port authority powers. The governing body of
241.6 	the foreign trade zone authority may establish a port authority
241.7 	that has the same powers as a port authority established under
241.8 	section 469.049.  If the foreign trade zone authority
241.9 	establishes a port authority, the governing body of the foreign
241.10 	trade zone authority may exercise all powers granted to a city
241.11 	by sections 469.048 to 469.068 within the area of the
241.12 	international economic development zone, except it may not
241.13 	impose or request imposition of a property tax levy under
241.14 	section 469.053 by any city.
241.15 		Subd. 4.Business subsidy law. Tax exemptions and job
241.16 	credits provided under this section are business subsidies and
241.17 	the foreign trade zone authority is the local government agency
241.18 	for the purpose of sections 116J.871 and 116J.993 to 116J.995.
241.19 	
EFFECTIVE DATE. This section is effective the day
241.20 	following final enactment.

241.21 	Sec. 17. [469.324] TAX INCENTIVES IN INTERNATIONAL
241.22 	ECONOMIC DEVELOPMENT ZONE.
241.23 		Subdivision 1.Availability. Qualified businesses that
241.24 	operate in an international economic development zone,
241.25 	individuals who invest in a regional distribution center or
241.26 	qualified businesses that operate in an international economic
241.27 	development zone, and property located in an international
241.28 	economic development zone qualify for:
241.29 	(1) exemption from individual income taxes as provided
241.30 	under section 469.325;
241.31 	(2) exemption from corporate franchise taxes as provided
241.32 	under section 469.326;
241.33 	(3) exemption from the state sales and use tax and any
241.34 	local sales and use taxes on qualifying purchases as provided in
241.35 	section 297A.68, subdivision 40;
241.36 	(4) exemption from the property tax as provided in section
242.1 	272.02, subdivision 68; and 
242.2 	(5) the jobs credit allowed under section 469.327.

242.3 	Sec. 18. [469.325] INDIVIDUAL INCOME TAX EXEMPTION.
242.4 		Subdivision 1.Application. An individual, estate, or
242.5 	trust operating a trade or business in the international
242.6 	economic development zone, and an individual making a qualifying
242.7 	investment in a qualified business operating in the
242.8 	international economic development zone, qualifies for the
242.9 	exemptions from taxes imposed under chapter 290, as provided in
242.10 	this section.  The exemptions provided under this section apply
242.11 	only to the extent that the income otherwise would be taxable
242.12 	under chapter 290.  Subtractions under this section from federal
242.13 	taxable income, alternative minimum taxable income, or any other
242.14 	base subject to tax are limited to the amount that otherwise
242.15 	would be included in the tax base absent the exemption under
242.16 	this section.  This section applies only to tax years beginning
242.17 	during the duration of the zone.
242.18 		Subd. 2.Business income. An individual, estate, or
242.19 	trust is exempt from the taxes imposed under chapter 290 on net
242.20 	income from the operation of a qualified business in the
242.21 	international economic development zone.  If the trade or
242.22 	business is carried on within and outside of the zone and the
242.23 	individual is not a resident of Minnesota, the exemption must be
242.24 	apportioned based on the zone percentage for the taxable year.
242.25 	If the trade or business is carried on within or outside of the
242.26 	zone and the individual is a resident of Minnesota, the
242.27 	exemption must be apportioned based on the zone percentage for
242.28 	the taxable year, except the ratios under section 469.321,
242.29 	subdivision 8, clause (1), items (i) and (ii), must use the
242.30 	denominators of the property and payroll factors determined
242.31 	under section 290.191.  No subtraction is allowed under this
242.32 	section in excess of 20 percent of the sum of the international
242.33 	economic development zone payroll and the adjusted basis of the
242.34 	property at the time that the property is first used in the
242.35 	international economic development zone by the business.
242.36 	
EFFECTIVE DATE. This section is effective for tax years
243.1 	beginning after December 31, 2006.

243.2 	Sec. 19. [469.326] CORPORATE FRANCHISE TAX EXEMPTION.
243.3 	(a) A qualified business is exempt from taxation under
243.4 	section 290.02, the alternative minimum tax under section
243.5 	290.0921, and the minimum fee under section 290.0922, on the
243.6 	portion of its income attributable to operations within the
243.7 	international economic development zone.  This exemption is
243.8 	determined as follows:
243.9 	(1) for purposes of the tax imposed under section 290.02,
243.10 	by multiplying its taxable net income by its zone percentage and
243.11 	subtracting the result in determining taxable income;
243.12 	(2) for purposes of the alternative minimum tax under
243.13 	section 290.0921, by multiplying its alternative minimum taxable
243.14 	income by its zone percentage and reducing alternative minimum
243.15 	taxable income by this amount; and 
243.16 	(3) for purposes of the minimum fee under section 290.0922,
243.17 	by excluding property and payroll in the zone from the
243.18 	computations of the fee or by exempting the entity under section
243.19 	290.0922, subdivision 2, clause (8).
243.20 	(b) No subtraction is allowed under this section in excess
243.21 	of 20 percent of the sum of the corporation's international
243.22 	economic development zone payroll and the adjusted basis of the
243.23 	zone property at the time that the property is first used in the
243.24 	international economic development zone by the corporation.
243.25 	(c) This section applies only to tax years beginning during
243.26 	the duration of the international economic development zone.

243.27 	EFFECTIVE DATE. This section is effective for tax years
243.28 	beginning after December 31, 2006.

243.29 	Sec. 20. [469.327] JOBS CREDIT.
243.30 		Subdivision 1.Credit allowed. A qualified business is
243.31 	allowed a credit against the taxes imposed under chapter 290.
243.32 	The credit equals seven percent of the:
243.33 	(1) lesser of:
243.34 	(i) zone payroll for the taxable year, less the zone
243.35 	payroll for the base year; or 
243.36 	(ii) total Minnesota payroll for the taxable year, less
244.1 	total Minnesota payroll for the base year; minus 
244.2 	(2) $30,000 multiplied by the number of full-time
244.3 	equivalent employees that the qualified business employs in the
244.4 	international economic development zone for the taxable year,
244.5 	minus the number of full-time equivalent employees the business
244.6 	employed in the zone in the base year, but not less than zero.
244.7 		Subd. 2.Definitions. (a) For purposes of this section,
244.8 	the following terms have the meanings given.
244.9 	(b) "Base year" means the taxable year beginning during the
244.10 	calendar year in which the zone designation was made under
244.11 	section 469.322, paragraph (d).
244.12 	(c) "Full-time equivalent employees" means the equivalent
244.13 	of annualized expected hours of work equal to 2,080 hours.
244.14 	(d) "Minnesota payroll" means the wages or salaries
244.15 	attributed to Minnesota under section 290.191, subdivision 12,
244.16 	for the qualified business or the unitary business of which the
244.17 	qualified business is a part, whichever is greater.
244.18 	(e) "Zone payroll" means wages or salaries used to
244.19 	determine the zone payroll factor for the qualified business,
244.20 	less the amount of compensation attributable to any employee
244.21 	that exceeds $70,000.
244.22 		Subd. 3.Inflation adjustment. For taxable years
244.23 	beginning after December 31, 2006, the dollar amounts in
244.24 	subdivisions 1, clause (2); and 2, paragraph (e), are annually
244.25 	adjusted for inflation.  The commissioner of revenue shall
244.26 	adjust the amounts by the percentage determined under section
244.27 	290.06, subdivision 2d, for the taxable year.
244.28 		Subd. 4.Refundable. If the amount of the credit exceeds
244.29 	the liability for tax under chapter 290, the commissioner of
244.30 	revenue shall refund the excess to the qualified business.
244.31 		Subd. 5.Appropriation. An amount sufficient to pay the
244.32 	refunds authorized by this section is appropriated to the
244.33 	commissioner of revenue from the general fund.
244.34 	
EFFECTIVE DATE. This section is effective for tax years
244.35 	beginning after December 31, 2006.

244.36 	Sec. 21. [469.328] REPAYMENT OF TAX BENEFITS.
245.1 		Subdivision 1.Repayment obligation. A person must repay
245.2 	the amount of the tax reduction received under section 469.324,
245.3 	subdivision 1, clauses (1) to (5), or credit received under
245.4 	section 469.327, during the two years immediately before it
245.5 	ceased to operate in the zone as a qualified business, if the
245.6 	person ceased to operate its facility located within the zone,
245.7 	ceased to be in compliance with the terms of the business
245.8 	subsidy agreement, or otherwise ceases to be or is not a
245.9 	qualified business.
245.10 		Subd. 2.Disposition of repayment. The repayment must be
245.11 	paid to the state to the extent it represents a state tax
245.12 	reduction and to the county to the extent it represents a
245.13 	property tax reduction.  Any amount repaid to the state must be
245.14 	deposited in the general fund.  Any amount repaid to the county
245.15 	for the property tax exemption must be distributed to the local
245.16 	governments with authority to levy taxes in the zone in the same
245.17 	manner provided for distribution of payment of delinquent
245.18 	property taxes.  Any repayment of local sales or use taxes must
245.19 	be repaid to the jurisdiction imposing the local sales or use
245.20 	tax.
245.21 		Subd. 3.Repayment procedures. (a) For the repayment of
245.22 	taxes imposed under chapter 290 or 297A or local taxes collected
245.23 	pursuant to section 297A.99, a person must file an amended
245.24 	return with the commissioner of revenue and pay any taxes
245.25 	required to be repaid within 30 days after ceasing to be a
245.26 	qualified business.  The amount required to be repaid is
245.27 	determined by calculating the tax for the period for which
245.28 	repayment is required without regard to the tax reductions and
245.29 	credits allowed under section 469.324.
245.30 	(b) For the repayment of property taxes, the county auditor
245.31 	shall prepare a tax statement for the person, applying the
245.32 	applicable tax extension rates for each payable year and provide
245.33 	a copy to the business.  The person must pay the taxes to the
245.34 	county treasurer within 30 days after receipt of the tax
245.35 	statement.  The taxpayer may appeal the valuation and
245.36 	determination of the property tax to the tax court within 30
246.1 	days after receipt of the tax statement.
246.2 	(c) The provisions of chapters 270 and 289A relating to the
246.3 	commissioner of revenue's authority to audit, assess, and
246.4 	collect the tax and to hear appeals are applicable to the
246.5 	repayment required under paragraphs (a) and (b).  The
246.6 	commissioner may impose civil penalties as provided in chapter
246.7 	289A, and the additional tax and penalties are subject to
246.8 	interest at the rate provided in section 270.75, from 30 days
246.9 	after ceasing to do business in the zone until the date the tax
246.10 	is paid.
246.11 	(d) If a property tax is not repaid under paragraph (c),
246.12 	the county treasurer shall add the amount required to be repaid
246.13 	to the property taxes assessed against the property for payment
246.14 	in the year following the year in which the treasurer discovers
246.15 	that the person ceased to operate in the international economic
246.16 	development zone.
246.17 	(e) For determining the tax required to be repaid, a tax
246.18 	reduction is deemed to have been received on the date that the
246.19 	tax would have been due if the person had not been entitled to
246.20 	the tax reduction.
246.21 	(f) The commissioner of revenue may assess the repayment of
246.22 	taxes under paragraph (d) at any time within two years after the
246.23 	person ceases to be a qualified business, or within any period
246.24 	of limitations for the assessment of tax under section 289A.38,
246.25 	whichever is later.
246.26 		Subd. 4.Waiver authority. The commissioner of revenue
246.27 	may waive all or part of a repayment, if, in consultation with
246.28 	the foreign trade zone authority and appropriate officials from
246.29 	the state and local government units, including the commissioner
246.30 	of employment and economic development, determines that
246.31 	requiring repayment of the tax is not in the best interest of
246.32 	the state or local government and the business ceased operating
246.33 	as a result of circumstances beyond its control, including, but
246.34 	not limited to:
246.35 	(1) a natural disaster;
246.36 	(2) unforeseen industry trends; or 
247.1 	(3) loss of a major supplier or customer.
247.2 	
EFFECTIVE DATE. This section is effective the day
247.3 	following final enactment.

247.4 	Sec. 22. [469.329] REPORTING REQUIREMENTS.
247.5 	(a) An applicant receiving designation of an international
247.6 	economic development zone under section 469.322 must annually
247.7 	report to the commissioner of employment and economic
247.8 	development on its progress in meeting the zone performance
247.9 	goals under the business plan for the zone and the applicant's
247.10 	compliance with the business subsidy law under sections 116J.993
247.11 	to 116J.995.
247.12 	(b) The commissioner must report on its Web site
247.13 	information on (1) the estimated amount of the tax expenditures
247.14 	for the zone, (2) the business subsidy agreements with qualified
247.15 	businesses in the zone, (3) the estimated number of new jobs
247.16 	created in the zone and investment made, and (4) other
247.17 	information similar to the information that the commissioner
247.18 	reports on the job opportunity building zone program on the
247.19 	department's Web site.

247.20 	EFFECTIVE DATE. This section is effective January 1, 2007.

247.21 	Sec. 23. GRANTS TO QUALIFYING BUSINESSES.
 247.22 	$750,000 is appropriated in fiscal year 2006 from the
247.23 	general fund to the commissioner of employment and economic
247.24 	development to be distributed to the foreign trade zone
247.25 	authority to provide grants to qualified businesses as
247.26 	determined by the authority, subject to Minnesota Statutes,
247.27 	sections 116J.993 to 116J.995, to provide incentives for the
247.28 	businesses to locate their operations in an international
247.29 	economic development zone.  If the money is not distributed
247.30 	during fiscal year 2006, it remains available for distribution
247.31 	under this section during fiscal year 2007.

247.32 	ARTICLE 11
247.33 	MISCELLANEOUS

247.34 	Section 1. Minnesota Statutes 2004, section 270C.02,
247.35 	subdivision 2, as added by Laws 2005, chapter 151, article 1,
247.36 	section 2, is amended to read:
248.1 		Subd. 2.Power to appoint staff. (a) The commissioner
248.2 	may organize the department as the commissioner deems necessary,
248.3 	and appoint one deputy commissioner, a department secretary,
248.4 	directors of divisions, and such other officers, employees, and
248.5 	agents, as the commissioner deems necessary to carry out the
248.6 	duties, responsibilities, and authority entrusted to the
248.7 	commissioner.  The commissioner may define the duties of such
248.8 	officers, employees, and agents, and delegate to them any of the
248.9 	commissioner's powers or duties, subject to the commissioner's
248.10 	control and under such conditions as the commissioner may
248.11 	prescribe.  Appointments to exercise delegated power to sign
248.12 	documents which require the signature of the commissioner or a
248.13 	delegate by law shall be by written order filed with the
248.14 	secretary of state. The delegations of authority granted by the
248.15 	commissioner remain in effect until revoked by the commissioner
248.16 	or a successor commissioner.
248.17 	
EFFECTIVE DATE. This section is effective the day
248.18 	following final enactment.

248.19 	Sec. 2. Minnesota Statutes 2004, section 270C.27,
248.20 	subdivision 1, as added by Laws 2005, chapter 151, article 1,
248.21 	section 24, is amended to read:
248.22 		Subdivision 1.In general. (a) A taxpayer may bring a
248.23 	civil action for damages against the commissioner in district
248.24 	court when an employee or the department has knowingly or
248.25 	negligently:
248.26 	(1) failed to release a lien as required by section
248.27 	270C.63, subdivision 11 15; or
248.28 	(2) failed to release a lien within 30 days after
248.29 	satisfaction of the liability on which the lien is based.
248.30 	(b) An action under paragraph (a), clause (2), must be
248.31 	preceded by 30 days' written notice by the taxpayer to the
248.32 	commissioner and the taxpayer's rights advocate that the lien
248.33 	has not been released.  An action under paragraph (a) must be
248.34 	commenced within two years after the date the right of action
248.35 	accrued.
248.36 	
EFFECTIVE DATE. This section is effective August 1, 2005.

249.1 	Sec. 3. Minnesota Statutes 2004, section 270C.28,
249.2 	subdivision 2, as added by Laws 2005, chapter 151, article 1,
249.3 	section 26, is amended to read:
249.4 		Subd. 2.Distribution. The appropriate statement
249.5 	prepared in accordance with subdivision 1 must be distributed by
249.6 	the commissioner to all taxpayers contacted with respect to the
249.7 	determination or collection of a tax, other than the providing
249.8 	of tax forms.  Failure to receive the statement does not
249.9 	invalidate the determination or collection action, nor does it
249.10 	affect, modify, or alter any statutory time limits applicable to
249.11 	the determination or collection action, including the time limit
249.12 	for filing a claim for refund.
249.13 	
EFFECTIVE DATE. This section is effective the day
249.14 	following final enactment except that for claims for refund, it
249.15 	is effective for claims filed after October 31, 2005.

249.16 	Sec. 4. Minnesota Statutes 2004, section 270C.445, as
249.17 	added by Laws 2005, chapter 151, article 1, section 54, is
249.18 	amended by adding a subdivision to read:
249.19 		Subd. 5a.Nongame wildlife checkoff. A tax preparer must
249.20 	give written notice of the option to contribute to the nongame
249.21 	wildlife management account in section 290.431 to corporate
249.22 	clients that file an income tax return and to individual clients
249.23 	who file an income tax return or property tax refund claim
249.24 	form.  This notification must be included with information sent
249.25 	to the client at the same time as the preliminary worksheets or
249.26 	other documents used in preparing the client's return and must
249.27 	include a line for displaying contributions.
249.28 	
EFFECTIVE DATE. This section is effective for returns
249.29 	prepared for taxable years beginning after December 31, 2004.

249.30 	Sec. 5. Minnesota Statutes 2004, section 289A.60,
249.31 	subdivision 6, as amended by Laws 2005, chapter 151, article 6,
249.32 	section 8, is amended to read:
249.33 		Subd. 6.Penalty for failure to file,false or fraudulent
249.34 	return, evasion. (a) If a person, with intent to evade or
249.35 	defeat a tax or payment of tax, fails to file a return,files a
249.36 	false or fraudulent return, or attempts in any other manner to
250.1 	evade or defeat a tax or payment of tax, there is imposed on the
250.2 	person a penalty equal to 50 percent of the tax, less amounts
250.3 	paid by the person on the basis of the false or fraudulent
250.4 	return, if any,due for the period to which the return related.
250.5 	(b) If a person files a false or fraudulent return that
250.6 	includes a claim for refund, there is imposed on the person a
250.7 	penalty equal to 50 percent of the portion of any refund claimed
250.8 	that is attributable to fraud.  The penalty under this paragraph
250.9 	is in addition to any penalty imposed under paragraph (a).
250.10 	
EFFECTIVE DATE. This section is effective the day
250.11 	following final enactment.

250.12 	Sec. 6. Minnesota Statutes 2004, section 501B.895, as
250.13 	added by Laws 2005, chapter 155, article 3, section 7, is
250.14 	amended to read:
250.15 	[501B.895] [PUBLIC HEALTH CARE PROGRAMS AND CERTAIN
250.16 	TRUSTS.]
250.17 	(a) It is the public policy of this state that individuals
250.18 	use all available resources to pay for the cost of long-term
250.19 	care services, as defined in section 256B.0595, before turning
250.20 	to Minnesota health care program funds, and that trust
250.21 	instruments should not be permitted to shield available
250.22 	resources of an individual or an individual's spouse from such
250.23 	use.
250.24 	(b) When a state or local agency makes a determination on
250.25 	an application by the individual or the individual's spouse for
250.26 	payment of long-term care services through a Minnesota public
250.27 	health care program pursuant to chapter 256B, any irrevocable
250.28 	inter-vivos trust or any legal instrument, device, or
250.29 	arrangement similar to an irrevocable inter-vivos trust created
250.30 	on or after July 1, 2005, containing assets or income of an
250.31 	individual or an individual's spouse, including those created by
250.32 	a person, court, or administrative body with legal authority to
250.33 	act in place of, at the direction of, upon the request of, or on
250.34 	behalf of the individual or individual's spouse, becomes shall
250.35 	be treated as if it were revocable for the sole purpose of that
250.36 	determination.  For purposes of this section, any inter-vivos
251.1 	trust and any legal instrument, device, or arrangement similar
251.2 	to an inter-vivos trust:
251.3 	(1) shall be deemed to be located in and subject to the
251.4 	laws of this state; and
251.5 	(2) is created as of the date it is fully executed by or on
251.6 	behalf of all of the settlors or others.
251.7 	(c) For purposes of this section, a legal instrument,
251.8 	device, or arrangement similar to an irrevocable inter-vivos
251.9 	trust means any instrument, device, or arrangement which
251.10 	involves a grantor who transfers or whose property is
251.11 	transferred by another including, but not limited to, any court,
251.12 	administrative body, or anyone else with authority to act on
251.13 	their behalf or at their direction, to an individual or entity
251.14 	with fiduciary, contractual, or legal obligations to the grantor
251.15 	or others to be held, managed, or administered by the individual
251.16 	or entity for the benefit of the grantor or others.  These legal
251.17 	instruments, devices, or other arrangements are irrevocable
251.18 	inter-vivos trusts for purposes of this section.
251.19 	(d) In the event of a conflict between this section and the
251.20 	provisions of an irrevocable trust created on or after July 1,
251.21 	2005, this section shall control.
251.22 	(e) This section does not apply to trusts that qualify as
251.23 	supplemental needs trusts under section 501B.89 or to trusts
251.24 	meeting the criteria of United States Code, title 42, section
251.25 	1396p (d)(4)(a) and (c) for purposes of eligibility for medical
251.26 	assistance.
251.27 	(f) This section applies to all trusts first created on or
251.28 	after July 1, 2005, as permitted under United States Code, title
251.29 	42, section 1396p, and to all interests in real or personal
251.30 	property regardless of the date on which the interest was
251.31 	created, reserved, or acquired.

251.32 	EFFECTIVE DATE. This section is effective the day
251.33 	following final enactment.

251.34 	Sec. 7. FEE STUDIES.
 251.35 		Subdivision 1.State agency fees. The commissioner of
251.36 	each state agency that imposes any fee on individuals or
252.1 	businesses in this state must report to the commissioner of
252.2 	revenue by January 15, 2006, on the type and amount of fees
252.3 	imposed, amount and type of fee increases since January 1, 2003,
252.4 	the revenues derived from each fee for each of the most recent
252.5 	four fiscal years, and the use of the revenues from the fees.
252.6 	The commissioner of revenue shall compile this information and
252.7 	provide a comprehensive report on all state agency fees to the
252.8 	finance and tax committees of the senate and the appropriations
252.9 	and tax committees of the house of representatives by February
252.10 	15, 2006.
252.11 		Subd. 2.School fees. By January 15, 2006, the
252.12 	Department of Education shall provide the house and senate
252.13 	education finance divisions and tax committees with a report
252.14 	that examines the total annual fees collected under Minnesota
252.15 	Public School Fee Law, Minnesota Statutes, sections 123B.34 to
252.16 	123B.39, in fiscal years 2002 to 2005.  The report must detail
252.17 	all different types of fees charged to Minnesota students under
252.18 	the law.  The report must report total fees statewide as well as
252.19 	by school district and charter school.
252.20 		Subd. 3.City fees. Each home rule charter or statutory
252.21 	city must report to the commissioner of revenue by January 15,
252.22 	2006, on the type and amount of fees it imposes, amount and type
252.23 	of fee increases since January 1, 2003, the revenues derived
252.24 	from each fee for each of the most recent four calendar years,
252.25 	and the use of the revenues from the fees.  The commissioner of
252.26 	revenue shall compile this information and provide a
252.27 	comprehensive report on all city fees to the finance and tax
252.28 	committees of the senate and the appropriations and tax
252.29 	committees of the house of representatives by February 15, 2006.

252.30 	Sec. 8. TRANSFER.
 252.31 	The commissioner of finance shall transfer up to
252.32 	$20,000,000 from the tax relief account under Minnesota
252.33 	Statutes, section 16A.1522, subdivision 4, to the general fund
252.34 	when accounts for the 2004-2005 biennium are closed.

252.35 	Sec. 9. TAXPAYER ASSISTANCE SERVICES; APPROPRIATION.
 252.36 	(a) $125,000 in fiscal year 2006 and $125,000 in fiscal
253.1 	year 2007 are appropriated from the general fund to the
253.2 	commissioner of revenue to make grants to one or more nonprofit
253.3 	organizations, qualifying under section 501(c)(3) of the
253.4 	Internal Revenue Code of 1986, to coordinate, facilitate,
253.5 	encourage, and aid in the provision of taxpayer assistance
253.6 	services.
253.7 	(b) "Taxpayer assistance services" mean accounting and tax
253.8 	preparation services provided by volunteers to low-income and
253.9 	disadvantaged Minnesota residents to help them file federal and
253.10 	state income tax returns and Minnesota property tax refund
253.11 	claims and may include provision of personal representation
253.12 	before the Department of Revenue and Internal Revenue Service.

253.13 	Sec. 10. VETERANS SERVICES; APPROPRIATION.
 253.14 	$125,000 is appropriated in fiscal year 2006 from the
253.15 	general fund to the commissioner of veterans affairs for a grant
253.16 	to the Vinland Center.  This is a onetime appropriation and does
253.17 	not become part of the base.

253.18 	Sec. 11. OTTER TAIL COUNTY DISASTER RELIEF;
253.19 	APPROPRIATION.
 253.20 	$500,000 is appropriated from the general fund to the
253.21 	commissioner of the Department of Employment and Economic
253.22 	Development for fiscal year 2006 for grants to local units of
253.23 	government for locally administered programs for businesses and
253.24 	property owners in Otter Tail County directly and adversely
253.25 	affected by the high winds during the week of June 19, 2005.
253.26 	Criteria and requirements for grants must be locally established
253.27 	with approval by the department.

253.28 	Sec. 12. DEPARTMENT OF REVENUE; APPROPRIATION.
 253.29 	$545,000 is appropriated for fiscal year 2006 and $545,000
253.30 	is appropriated for fiscal year 2007 from the general fund to
253.31 	the commissioner of revenue to administer this act.

253.32 	Sec. 13. REVISOR INSTRUCTION.
 253.33 	Notwithstanding any law to the contrary, if a provision of
253.34 	a section of Minnesota Statutes repealed by Laws 2005, chapter
253.35 	151, article 1, is amended or repealed during the 2005 First
253.36 	Special Session, the amendment or repealer shall supersede the
254.1 	provisions of Laws 2005, chapter 151, article 1, and the revisor
254.2 	shall codify the amendment or repealer consistent with the
254.3 	recodification of the affected section by Laws 2005, chapter
254.4 	151, article 1.  In addition, the revisor shall code new
254.5 	sections or subdivisions enacted during the 2005 First Special
254.6 	Session consistent with the recodification of Laws 2005, chapter
254.7 	151, article 1.

254.8 	EFFECTIVE DATE. This section is effective August 1, 2005.

254.9 	Sec. 14. EFFECTIVE DATE; RELATIONSHIP TO OTHER
254.10 	APPROPRIATIONS.
 254.11 	Appropriations in this act are effective retroactively from
254.12 	July 1, 2005, and supersede and replace funding authorized by
254.13 	order of the Ramsey County District Court in Case No.
254.14 	C9-05-5928, as well as by Laws 2005, First Special Session
254.15 	chapter 2, which provided temporary funding through July 14,
254.16 	2005.